For the third quarter, net sales also increased by 11% to US$ 1.76 billion, driven by core organic Innerwear growth and strong acquisition-related International growth. That 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.

“As forecasted, we delivered strong growth in the third quarter, and we are generating record cash flow,” said Hanes CEO Gerald W. Evans Jr. “Our sales initiatives have re-accelerated organic growth in several core categories, including 2% growth in the quarter for the Innerwear segment. Our acquisitions, both past and present, are performing extremely well. Our inventory level is declining, and cash flow from operations is already US$ 300 million ahead of last year. Our business is unfolding as expected this year, and we remain confident in our ability to deliver on our full-year guidance.”

Key figures

Innerwear sales increased by 2%, 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. The initial shipments of the company’s core products featuring FreshIQ odour control technology began late in the quarter. Segment operating profit increased by 6%, and the operating profit margin increased by 90 basis points to 22.0%.

Acquisitions of Pacific Brands of Australia, Champion Europe and Champion Japan, as well as organic growth in Asia, drove 59% growth in International sales. Acquisitions contributed approximately US$ 180 million in sales in the quarter. Operating profit growth of 79% 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%.

Activewear segment sales decreased by 2% 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%, affected by lower volume and the mix of products sold.

The Direct to Consumer segment, which is undergoing a transition to a growth-oriented brand strategy, had an 11% decrease in sales and a 52% decrease in operating profit. Results were affected by the segment’s exit from its legacy catalogue business and noncore offerings to a more focused branded-product store and Internet strategy.

2016 financial guidance

Hanes has narrowed its 2016 full-year guidance to reflect year-to-date performance and expectations for the fourth quarter. The company expects 2016 net sales of US$ 6.15 billion to US$ 6.18 billion, GAAP operating profit of US$ 807 million to US$ 822 million, adjusted operating profit excluding actions of US$ 940 million to US$ 955 million, GAAP EPS for continuing operations of US$ 1.45 to US$ 1.49, adjusted EPS excluding actions for continuing operations of US$ 1.89 to US$ 1.92, and record net cash from operations of US$ 750 million to US$ 800 million.

The midpoint of the updated guidance represents growth over 2015 of 8% for net sales; 37% for GAAP operating profit; 10% for adjusted operating profit; 39% for GAAP EPS; 15% for adjusted EPS; and 241% for net cash from operations.

Based on year-to-date performance, the updated full-year guidance implies fourth-quarter 2016 guidance for net sales of US$ 1.7 billion to US$ 1.73 billion; GAAP operating profit of US$ 235 million to US$ 250 million; adjusted operating profit of US$ 276 million to US$ 291 million; GAAP EPS for continuing operations of US$ 0.46 to US$ 0.50, adjusted EPS for continuing operations of US$ 0.57 to US$ 0.60, and net cash from operations of US$ 542 million to US$ 592 million.

www.hanes.com