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Hanesbrands reports surge in operating profits in Q3

American clothing company HanesBrands Inc, a leading marketer of everyday basic apparel, has reported an increase in its operating profit of 10 per cent in the third quarter of 2016 that ended on 1 October. Till then, On a GAAP basis, the operating profit of the company increased to US$ 228 million compared to US$ 208 million for the same period in 2015.

For the third quarter, net sales also increased by 11 per cent to US$ 1.76 billion, driven by core organic Innerwear growth and strong acquisition-related International growth. The growth was partially offset by declines in the Activewear and Direct to Consumer segments, the company reports. The company also delivered a record for cash flow in a quarter – US$ 337 million.

Driven by a successful focus-on-the-core initiative that saw high-single-digit growth combined for men’s, women’s and children’s underwear, innerwear sales increased by 2 per cent. The initial shipments of the company’s main products that feature FreshIQ odour control technology began late in the quarter. Segment operating profit increased by 6 per cent, and the operating profit margin increased by 90 basis points to 22.per cent.

Acquisitions of Pacific Brands of Australia, Champion Europe and Champion Japan, as well as organic growth in Asia, drove 59 per cent growth in International sales. Acquisitions contributed approximately US$ 180 million in sales in the quarter. Operating profit growth of 79 per cent was driven by widespread strength in Europe, Latin America and Asia, as well as acquisitions. The segment operating profit margin increased by 140 basis points to 12.8 per cent.

Activewear segment sales decreased by 2 per cent as a result of bankruptcies of certain sporting goods retailers. Champion at mass, Hanes Activewear, and college bookstore sports apparel all increased sales. Total segment operating profit decreased by 22 per cent affected by lower volume and the mix of products sold. The company based in Winston-Salem, North Carolina employs around 50,000 people internationally.