HanesBrands Inc. net sales for the first quarter, totalled 1.51 billion dollars, an increase of 25 percent, while total constant currency first-quarter net sales increased 22 percent.
The company said, double-digit growth in both global innerwear and activewear businesses was driven by strong point-of-sale performance across all major channels, led by 82 percent growth in online channels, and market share gains in key categories.
“Our strong first-quarter results showed growth across all business segments,” said chief executive officer Steve Bratspies, adding, “Champion continued its rapid growth, driven by strong consumer demand. We gained share in U.S. innerwear, and our Hanes total support pouch launch shows how our brands can appeal to younger consumers with a combination of innovative products and compelling marketing.”
Review of HanesBrands Q1 performance
First-quarter GAAP gross margin of 40 percent increased 520 basis points compared to the prior year period and adjusted gross margin of 40.2 percent increased 360 basis points over the comparable prior year period.
First-quarter GAAP operating profit increased 297 percent to 190 million dollars, while GAAP operating margin of 12.6 percent increased 860 basis points over prior year. Adjusted operating profit increased 190 percent to 210 million dollars, while adjusted operating margin increased 790 basis points over prior year to 13.9 percent.
The company added that GAAP income totalled 128 million dollars or 37 cents per diluted share 5 million dollars or 1 cent per diluted share, in the prior year period. Adjusted income totalled 136 million dollars or 39 cents per diluted share compared to 26 million dollars or 7 cents per diluted share in the prior year period.
HanesBrands results across core categories
The company further said that U.S. innerwear sales of 570 million dollars increased 35 percent over prior year driven by underlying point-of-sale growth and market share gains combined with the overlap of the initial pandemic shutdown as well as certain one-time benefits, including government stimulus and retailer restocking.
For the quarter, basics revenue increased 39 percent with growth across all product categories. Intimates revenue increased 27 percent driven by double-digit growth in bras.
U.S activewear sales increased 26 percent over prior year to 364 million dollars, driven by growth in the online channel and wholesale brick and mortar channels; the overlap of the initial pandemic shutdown and benefits from government stimulus. For the quarter, Champion sales increased 34 percent over prior year and revenue from the company’s other activewear brands increased 16 percent. The company said, while the rate of decline improved from the fourth quarter, the sports and college licensing business continued to be negatively impacted by campus shutdowns and limits on sports attendance due to the Covid-19 pandemic. The company also saw the effects of an earlier-than-anticipated rebound in the printwear channel.
International revenue and operating profit increased 18 percent and 72 percent, respectively, while on a constant currency basis sales and profit increased 8 percent and 57 percent, respectively. On a constant currency basis, the company experienced growth in: the Americas, driven primarily by lapping last year’s Covid shutdown; Australia due to continued favourable consumer sentiment; and Europe, driven by growth of Champion despite continued Covid-related headwinds in the region. Constant currency sales in Asia Pacific declined over prior year as Japan continued to be negatively impacted by Covid-related restrictions, which more than offset growth in South Korea and China.
HanesBrands expects Q2 sales growth of 69 percent
For the second quarter of 2021, which ends on July 3, 2021, the company currently expects net sales of approximately 1.56 billion dollars to 1.59 billion dollars, which represents approximately 2 percent growth at the midpoint. Excluding PPE, net sales at the midpoint of the guidance range are expected to increase 69 percent over prior year period.
The company expects GAAP operating profit to range from approximately 179 million dollars to 189 million dollars and adjusted operating profit to range from approximately 200 million dollars to 210 million dollars. The midpoint of adjusted operating profit implies an operating margin of approximately 13 percent.
GAAP earnings per share are expected to range from 32 cents to 35 cents and adjusted earnings per share to range from 37 cents to 40 cents.
For fiscal year 2021, which ends on January 1, 2022, the company currently expects net sales to total approximately 6.2 billion dollars to 6.3 billion dollars. At the midpoint, net sales guidance implies approximately 2 percent growth over prior year and 3 percent growth adjusted for the 53rd week in 2020.
Adjusting for PPE and the 53rd week in 2020, net sales at the midpoint of the guidance range are expected to increase 19 percent over prior year period.
The company expects GAAP operating profit from continuing operations to range from approximately 730 million dollars to 760 million dollars, while adjusted operating profit is expected to range from approximately 815 million dollars to 845 million dollars. The midpoint of adjusted operating profit suggests an operating margin of 13.3 percent.
The company expects GAAP earnings per share from continuing operations to range from approximately 1.33 dollars to 1.41 dollars and adjusted earnings per share from continuing operations to range from approximately 1.51 dollars to 1.59 dollars.
The company’s board of directors declared a regular quarterly cash dividend of 15 cents per share to be paid on June 1, 2021, to stockholders of record at the close of business on May 21, 2021.