Hanesbrands Inc. (NYSE: HBI) yesterday reported its third consecutive quarter of strong growth with third-quarter 2010 net sales increasing 10.8 percent and diluted earnings per share increasing 47 percent to $0.63, up from $0.43 a year ago.

Earnings growth in the quarter was propelled by the third consecutive quarter of accelerated sales growth and lower restructuring, which overcame a higher income tax rate. Strong sales growth in the company’s three largest business segments – Innerwear, Outerwear and International – drove a net sales increase of $115 million to $1.17 billion. Net sales in the year-ago quarter were $1.06 billion.

Based on performance in the first three quarters and the pending Gear For Sports acquisition, Hanesbrands updated its 2010 guidance. Full-year net sales are expected to be approximately $4.3 billion, an increase of more than 10 percent over last year’s net sales of $3.9 billion. Full-year EPS is expected to be in the range of $2.27 to $2.32, more than four times last year’s EPS of $0.54. The company’s previous guidance for 2010 was a range of $2.25 to $2.35.

“We are pleased with delivering continued strong growth in 2010,” Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said. “Our brands are performing well with consumers and delivering results for our customers. We are well positioned to capitalize on our momentum and our growth platform as we prepare for 2011. We are poised to continue our success through the strength of our brands, additional new programs, our ability to price our products in an inflationary environment, and the addition of our pending Gear For Sports acquisition.

Business Segment Summary and Highlights

The company’s significant retail shelf-space gains for 2010 and solid back-to-school sales results were the foundation for the quarter’s sales growth. New programs and shelf-space gains contributed approximately 7 percentage points of the quarter’s 10.8 percent sales growth. The remaining growth came from increased retail sell through, retailer inventory restocking, and favorable foreign currency exchange rates in the quarter.

Double-digit sales increases in the Innerwear, Outerwear and International segments combined for $122 million in sales growth. Direct to Consumer sales were up slightly, and sales in the Hosiery and Other segments declined by $7 million combined.

Key business segment highlights include:

  • Innerwear sales increased by nearly 10 percent, driven by strong results for male underwear and intimate apparel. The segment achieved growth with mass, mid-tier, department store and dollar-store retail customers. Men’s underwear, which continues to make significant share gains, recorded its third consecutive quarter of strong double-digit sales growth. Segment operating profit increased by 2 percent in spite of higher input costs, including cotton, and higher distribution costs.
  • Across-the-board growth in the Outerwear segment, led by the Champion, Just My Size and Hanes brands, resulted in a 19 percent sales increase for the quarter. Retail activewear, retail casualwear and wholesale casualwear all had double-digit sales gains. Segment operating profit decreased by 11 percent as a result of higher input and distribution costs.
  • International segment sales increased by 13 percent, the third consecutive quarter of double-digit growth. Sales gains across numerous countries included strong double-digit growth in Argentina, Brazil, China, India and Mexico. Segment operating profit increased by 31 percent.

Gear For Sports

Hanesbrands expects to complete its acquisition of graphic apparel company GearCo, Inc., known as Gear For Sports, on Nov. 1. A leading seller of licensed logo and graphic apparel in collegiate bookstores and other channels, Gear For Sports had sales of approximately $225 million in its fiscal year ended in June.

Based on the timing of the acquisition, Gear For Sports is expected to contribute sales of approximately $30 million in the fourth quarter and add incremental revenue of approximately $200 million in 2011.

Macro Trends and Factors for 2011

Hanesbrands has secured price increases to offset annualized input cost inflation of approximately $150 million in 2011. The company knows its input costs for the first two quarters of 2011 and has informed customers that if current high commodity and other related costs remain in place the company will increase prices on appropriate products effective midyear in 2011.

Hanesbrands expects to issue its 2011 net sales and EPS guidance in January when it reports fourth-quarter 2010 earnings. Hanesbrands could see high-single-digit to double-digit sales growth in 2011 based on macro trends and other factors, including product pricing and sales volume, the Gear For Sports acquisition, flat to moderate consumer spending, and benefits of net shelf-space gains in 2010 and 2011. For EPS, Hanesbrands is seeking to achieve its annual long-term growth goal of 10 percent to 20 percent in 2011, with a desire to be in the upper half of that range.

Webcast Conference Call

Hanesbrands will host a live Internet webcast of its quarterly investor conference call at 4:30 p.m. EDT today. The broadcast may be accessed on the home page of the Hanesbrands corporate website, www.hanesbrands.com. The call is expected to conclude by 5:30 p.m.

An archived replay of the conference call webcast will be available in the investors section of the Hanesbrands website. A telephone playback will be available from approximately 7 p.m. EDT today through midnight Nov. 3, 2010. The replay will be available by calling toll-free (800) 642-1687, or by toll call at (706) 645-9291. The replay pass code is 17882233.

Hanesbrands Inc. is a leading marketer of everyday apparel essentials under some of the world’s strongest apparel brands, including Hanes, Champion, Playtex, Bali, JMS/Just My Size, barely there and Wonderbra. The company sells T-shirts, bras, panties, men’s underwear, children’s underwear, socks, hosiery, casualwear and activewear produced in the company’s low-cost global supply chain. Hanesbrands has approximately 50,000 employees in more than 25 countries and takes pride in its strong reputation for ethical business practices. More information about the company and its corporate social responsibility initiatives, including the company’s 2010 U.S. Environmental Protection Agency Energy Star Partner of the Year Award, may be found on the Hanesbrands Internet website at www.hanesbrands.com.

Learn more about Hanes from the links below.

Hanes for Women
Hanes for Men
Hanes for Kids

Read more HanesBrands News from Apparel Search or here on the Fashion Newspaper.

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