1000 East Hanes Mill Road
Winston-Salem, NC 27105
FOR IMMEDIATE RELEASE
| News Media, contact: | Matt Hall, (336) 519 3386 |
| Analysts and Investors Contact: | Brian Lantz, (336) 519 7130 |
WINSTON-SALEM, N.C. (April 21, 2008) – Hanesbrands Inc. (NYSE: HBI), a leading marketer of innerwear,
outerwear and hosiery apparel, today reported first-quarter 2008 results.
Earnings per diluted share in the quarter more than tripled to $0.38. Excluding actions, non-GAAP earnings
per diluted share increased by 56 percent to $0.42, up $0.15 as a result of reduced long-term debt, lower
base interest rates, and operating profit growth. Total net sales decreased by 5.0 percent to
$987.8 million, reflective of conditions in the retail marketplace.
“We are very pleased with our profit results in a tough economic climate. Our strong profit growth was
driven by continued cost-reduction initiatives and management of our debt structure in spite of a sales
decline,” Hanesbrands Chief Executive Officer Richard A. Noll said. “The key to our success is the
continued execution of our business strategies of investing in our brands, driving cost reductions and
globalizing our supply chain, and effectively investing our cash flow.”
Noteworthy Financial Highlights
Selected highlights for the quarter
ended March 29, 2008, compared with the year-ago quarter ended March 31,
2007, include:
• Earnings per diluted share in the quarter increased 217
percent to $0.38, up from $0.12 a year ago. Non-GAAP diluted EPS, which
excludes actions, increased 56 percent to $0.42 per share, up from $0.27 a
share a year ago.
Non-GAAP net income, which excludes actions, increased by $14.2 million on the strength of cost reductions,
supply chain initiatives, and lower interest expense. This net income improvement was a result of
$4 million from higher operating profit, $6 million in lower interest expense due to lower long-term debt
and implementing our accounts receivable securitization program, as well as $6 million in savings from
lower LIBOR rates. Those improvements were partially offset by slightly higher income tax expense.
• Operating profit in the
quarter increased to $87.8 million, from $68.9 million a year ago.
Non-GAAP operating profit, which excludes actions, increased by 4.9
percent to $93.6 million for an operating margin on sales of 9.5 percent
versus 8.6 percent a year ago.
Cost-reduction efforts resulted in an improved gross margin. As a percent of sales, selling, general
and administrative costs were up, but the actual costs were flat, even though a timing shift resulted in
higher media spending in the first quarter to support the launch of marketing initiatives for new Hanes
products and the revitalization plan for Playtex.
• Total net sales in the
quarter decreased by $52 million to $987.8 million, from $1.04 billion in
the year-ago quarter.
Sales decreased in the company’s innerwear and outerwear segments, with declines in most product categories
across most customers. The company’s sales to retailers are consistent with broad-based macroeconomic
point-of-sale trends. International segment sales increased by 15 percent, driven by favorable foreign
currency exchange rates and growth.
• Hanesbrands continued to have a strong cash position
at the end of the quarter. The company repurchased $8.3 million in company
stock in the quarter, or 334,980 shares at an average price of $24.69.
(Diluted EPS excluding actions, net income excluding actions and operating profit excluding actions are
non-GAAP measures used to better assess underlying business performance because they exclude the effect of
unusual actions that are not directly related to operations. The unusual actions in the current or year-ago
quarter were restructuring and related charges, amortization of gain on postretirement benefits, nonrecurring
spinoff and related charges, and the tax effect on these items. See Table 4 for details and reconciliation
with reported operating results consistent with generally accepted accounting principles.)
Other Quarter Comments
In March, Hanes launched its television, print and Internet advertising and marketing campaign for Hanes No Ride
Up Panties featuring actress Sarah Chalke. The panties are the first products to feature Hanes’ new Comfort Fit
consumer satisfaction guarantee.
“Our successful profit results in the quarter demonstrate that we have several business levers to increase our
EPS as we strive to achieve our long-term growth goals,” Noll said. “We are pleased with our ability to execute
cost reductions to deliver our solid profit performance. We are now focused on executing sales and marketing
plans for the rest of the year, particularly for the important back-to-school and year-end holiday periods, to
best navigate a challenging consumer environment.”
Hanesbrands Policy on Guidance
Hanesbrands follows a policy of not providing quarterly or annual EPS guidance. The company plans to
communicate appropriately to provide investors with an understanding of long-term goals, the trends associated
with its business and current financial performance.
Webcast Conference Call
Hanesbrands will host a live Internet webcast of its quarterly investor conference call at 9 a.m. EDT today.
The broadcast may be accessed on the home page of the Hanesbrands corporate Web site,
www.hanesbrands.com. The call is expected to conclude by 10 a.m.
An archived replay of the conference call webcast will be available in the investors section of the Hanesbrands
Web site. A telephone playback will be available from approximately noon EDT today until midnight on April 28,
2008. 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 43163918.
Cautionary Statement Concerning Forward-Looking Statements
Statements in this press release that are not statements of historical fact are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including those regarding our launch as an independent company and the benefits expected from that
launch, our long-term goals, and trends associated with our business. These forward-looking statements are made
only as of the date of this press release and are based on our current intent, beliefs, plans and expectations.
They involve risks and uncertainties that could cause actual future results, performance or developments to
differ materially from those described in or implied by such forward-looking statements. These risks and
uncertainties include the following: our ability to migrate our production and manufacturing operations to
lower-cost countries around the world; our ability to effectively implement other components of our business
strategy; costs and adverse publicity from violations of labor or environmental laws by us or our suppliers;
our ability to successfully manage adverse changes in social, political, economic, legal and other conditions
affecting our foreign operations; retailer consolidation and other changes in the apparel essentials industry;
our ability to keep pace with changing consumer preferences; loss of or reduction in sales to, or financial
difficulties experienced by, any of our top customers; fluctuations in the price or availability of cotton or
labor; our debt and debt-service requirements that restrict our operating and financial flexibility and impose
interest and financing costs; and other risks identified from time to time in our most recent Securities and
Exchange Commission reports, including the 2007 Annual Report on Form 10-K, 2007 quarterly reports on Form 10-Q
and current reports on Form 8-K, registration statements, press releases and other communications. The company
undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes to future operating results over time.
Hanesbrands Inc.
Hanesbrands Inc. is a leading
marketer of innerwear, outerwear and hosiery apparel under strong consumer
brands, including Hanes, Champion, Playtex, Bali, JustMySize, barelythere
and Wonderbra. The company designs, manufactures, sources and sells
T-shirts, bras, panties, men’s underwear, children’s underwear, socks,
hosiery, casual wear and active wear. Hanesbrands has approximately 50,000
employees in more than 25 countries. More information about Hanesbrands
Inc. may be found on the internet at www.hanesbrands.com