HanesBrands reported its fourth-quarter and full-year 2010 results, completing a successful year of double-digit net sales growth and increased earnings per share.
Hanes’ net sales for the year increased by 11.2 percent to $4.33 billion, driven by significant share gains and consecutive quarterly sales growth rates of 8 percent, 9 percent, 11 percent and 16 percent, respectively. Earnings per share were $2.16, compared with $0.54 last year, and exceeded the company’s previous guidance of $2.07 to $2.12 as a result of lower-than-expected expenses related to debt refinancing.
For 2011, Hanes expects continued double-digit growth with projected net sales of approximately $4.85 billion to $5.0 billion and EPS of approximately $2.60 to $2.80.
“We had a great year in which we significantly exceeded our initial sales expectations by generating double-digit growth and gaining significant market share,” Hanes’ Chairman and Chief Executive Officer Richard A. Noll said. “Our growth platform is working and we are focused on continued share gains. With our strong brands and global supply chain, we are in good position to address the challenges of inflation with our retail partners and continue increasing sales and market share.”
2010 Financial Highlights and Business Segment Summary
Fourth-quarter 2010 EPS of $0.29 reflects a reduction of $0.14 for expenses related to debt refinancing. The company had previously estimated that debt-refinancing expenses would reduce EPS by $0.20 in the quarter. As expected, the quarter’s EPS was also impacted by higher cotton costs and higher expenses to service sales growth.
Last year’s fourth-quarter EPS was a loss of $(0.01), including the impact of $0.57 for debt refinancing and restructuring and related costs. Excluding these expenses, the company would have earned $0.56 in last year’s fourth quarter.
Sales growth for the year and fourth quarter were driven by significant market-share gains, positive retail sell-through of the company’s products, and retail inventory restocking. Net shelf-space and distribution gains contributed 5 percentage points of growth in the fourth quarter and 6 percentage points for the year. The Gear For Sports acquisition, completed Nov. 1, 2010, added 4 percentage points of sales growth in the fourth quarter.
“Our sales growth in 2010 was broad-based with increases in nearly every country and in every category except sheer hosiery,” Noll said. “Sales increased with nine of our top 10 U.S. customers, led by impressive market share growth, most notably in men’s underwear with share growth of nearly 5 points and share growth of 1 to 2 points each for socks, activewear, plus-size women’s apparel, and bras.”
“We have visibility to macro trends from the consumer all the way back through the supply chain to cotton, and 2011 looks to be unfolding as we expected,” Noll said. “We believe this visibility coupled with our brand strength gives us a competitive advantage to manage our business in this inflationary environment.”
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