Hanesbrands Q2 profit soars on lower cotton costs

• Q2 profit soars to $121.6m from $1.2m
• Sales climbed 1.6% to $1.2bn
• Gross margin improved to 36.3% versus 31.1%

Apparel basics manufacturer Hanesbrands has seen its second-quarter net profit soar thanks to substantially lower cotton costs and its innovate-to-elevate initiatives.

The Winston-Salem, North Carolina-based company, which agreed to acquire rival intimate apparel maker Maidenform Brands for US$575m last week, said net income reached $121.6m for the three months to 29 June, compared to $1.2m in the same period last year.

Net sales climbed 1.6% to $1.2bn from $1.18bn the prior year. Innerwear sales rose 3%, while the activewear segment, formerly named outerwear, posted flat sales. International sales, however, slipped 1% on unfavourable exchange rates and direct-to-consumer sales dropped 2%.

Gross margin improved to 36.3% from 31.1%.

During the first six months of the year, the company returned to a net profit of $173m from a loss of $25.6m last time. Sales edged up 0.4% to $2.14bn from $2.15bn last year.

“We achieved record profit margins and earnings per share in the second quarter, with each business segment achieving improved profitability,” said Hanes chairman and CEO Richard Noll. “Our innovate-to-elevate platforms continue to excel and are quickly delivering results for us and our retail partners.

The company updated its full-year guidance and now expects earnings per share of $3.50-3.65, up from its previous forecast of $3.25-3.40. Sales, meanwhile, are expected to be $4.55bn against the company’s earlier guidance of around $4.6bn.
 
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