HanesBrands raises 2024 financial targets after strong Q4 results

Fourth quarter net sales at HanesBrands reached 1.75 billion dollars, an increase of 63 million dollars or 4 percent, including 10 percent growth in Champion brand sales globally. Total constant currency fourth-quarter net sales also increased 4 percent.

The company said, excluding 28 million dollars in sales of PPE and 45 million dollars from a 53rd week in the prior period, and a 9 million dollars headwind from exchange rates in the current period, net sales increased 146 million dollars or 9 percent, over prior year.

The company added that the year-over-year growth in net sales was driven by strong consumer demand and point-of-sale trends in the U.S., Europe, Americas and certain Asia markets, including China, which more than offset lingering Covid-related headwinds in Australia and Japan.

“We are rapidly creating a new HanesBrands, focused on growth and serving our consumers and customers like never before. We are implementing a three-year 600 million dollars stock repurchase program, based on our confidence in future growth,” said Steve Bratspies, chief executive officer of the company in a statement.

Highlights of HanesBrands’ fourth quarter results

Compared to fourth-quarter 2019, the company’s net sales from continuing operations increased 230 million dollars or 15 percent, including 25 percent growth in Champion brand sales globally. Total constant currency net sales increased 14 percent.

GAAP gross margin of 38.1 percent increased 3,220 basis points compared to prior year and decreased 120 basis points compared to fourth-quarter 2019. Adjusted gross margin of 38.4 percent decreased 195 basis points compared to last year and approximately 235 basis points compared to fourth-quarter 2019.

GAAP operating profit was 156 million dollars compared to an operating loss of 397 million dollars in the prior year and operating profit of 230 million dollars in the fourth-quarter 2019. GAAP operating margin of 8.9 percent improved from the 23.5 loss in the prior year and declined from 14.3 percent in the fourth-quarter 2019.

Adjusted operating profit of 220 million dollars decreased 9 million dollars or 4 percent compared to prior year and 8 million dollars or 3 percent compared to 2019. Adjusted operating margin of 12.6 percent was ahead of the company’s expectation. Adjusted operating margin declined approximately 100 basis points compared to last year and 240 basis points compared to fourth-quarter 2019.

On a GAAP basis, fourth-quarter income from continuing operations totaled 68 million dollars or 19 cents per diluted share. This compares to a loss from continuing operations of 292 million dollars or 83 cents loss per diluted share in the prior year period, and income from continuing operations of 159 million dollars or 43 cents per diluted share in fourth-quarter 2019.

Adjusted income from continuing operations totaled 156 million dollars or 44 cents per diluted share compared to 148 million dollars or 42 cents per diluted share, in the prior year period and 142 million dollars or 39 cents per diluted share, in fourth-quarter 2019.

HanesBrands’ performance across business segments

The company’s innerwear sales increased 3 percent over last year, excluding PPE, driven by point-of-sale growth across channels. As compared to fourth-quarter 2019, sales increased 108 million dollars or 19 percent, with double-digit growth in the kids, socks, women’s and men’s businesses. Relative to 2019, the company’s U.S. innerwear market share increased approximately 150 basis points with increased share positions in men’s, women’s, kids and socks.

The company further said that activewear sales grew 46 million dollars or 11 percent over prior year driven by strong point-of-sale trends across its activewear brands. Sales increased 73 million dollars or 19 percent compared to fourth-quarter 2019. By brand, Champion sales increased 21 percent and sales of its other active brands increased high teens as compared to 2019.

International sales increased 19 million dollars or 4 percent compared to prior year. Excluding 6 million dollars of PPE sales in the prior year quarter, fourth-quarter sales increased 5 percent on a reported basis and 7 percent on a constant currency basis. Constant currency sales grew in the Americas, Europe and China driven by strong consumer demand for the company’s brands. Constant currency sales declined in Japan and Australia as both regions continued to be impacted by store closures and tentative consumer behaviour resulting from the ongoing Covid pandemic.

As compared to fourth-quarter 2019, international segment revenue increased 49 million dollars or 10 percent. On a constant currency basis, sales increased 7 percent with strong growth in Europe, the Americas, Australia and China more than offsetting the impact from Covid-related headwinds in Japan.

HanesBrands raises its 2024 financial targets

The company said that it exceeded its initial full-year 2021 outlook. Sales exceeded the midpoint of its prior range by approximately 550 million, adjusted operating profit was approximately 100 million dollars higher, adjusted earnings per share were approximately 30 cents higher and operating cash flow was approximately 100 million dollars higher.

The company has raised its 2024 Full Potential financial targets as a result of increased consumer demand for its brands globally, the traction of its growth strategy.

For 2024, The company targets approximately 8 billion dollars of sales, an increase from the prior goal of approximately 7.4 billion dollars; approximately 3.2 billion dollars of global Champion brand sales, an increase from the prior goal of approximately 3 billion dollars; approximately 1.15 billion dollars of adjusted operating profit, an increase from the prior goal of approximately 1.05 billion dollars; adjusted operating margin of approximately 14.4 percent, an increase from the prior goal of nearly 14.3 percent and approximately 1.6 billion dollars of cumulative three-year free cash flow, an increase from the prior goal of approximately 1.5 billion dollars.

As part of its growth initiative, the company plans to sell its U.S. sheer hosiery business. The company expects the business to generate approximately $60 million of sales and zero operating profit in 2022, which is reflected in the company’s current 2022 guidance estimates.

For the first quarter of 2022, the company currently expects net sales from continuing operations of approximately 1.51 billion dollars to 1.57 billion dollars. At the midpoint, this represents approximately 2 percent growth over prior year on a reported basis and 4 percent growth on a constant currency basis.

GAAP operating profit from continuing operations to range from approximately 120 million dollars to 150 million dollars and adjusted operating profit from continuing operations to range from approximately 135 million dollars to 165 million dollars.

GAAP earnings per share from continuing operations to range from approximately 20 cents to 27 cents and adjusted earnings per share from continuing operations to range from approximately 24 cents to 31 cents.

For fiscal-year 2022, the company currently expects net sales from continuing operations of approximately 7 billion dollars to 7.15 billion dollars. At the midpoint, this represents approximately 4 percent growth over prior year on a reported basis and 5.5 percent growth on a constant currency basis.

GAAP operating profit from continuing operations to range from approximately 780 million dollars to 850 million dollars, adjusted operating profit from continuing operations to range from approximately $840 million to $910 million, which includes a projected headwind of approximately 14 million dollars from changes in foreign currency exchange rates. The midpoint of adjusted operating profit guidance range represents an operating margin of 12.4 percent.

GAAP earnings per share from continuing operations to range from approximately 1.50 dollars to 1.67 dollars and adjusted earnings per share from continuing operations to range from approximately 1.64 dollars to 1.81 dollars.