Hanesbrands ready to start production at new China knitting facility
28th April 2009, Winston-Salem, NC
Leading marketer of innerwear, outerwear and hosiery, Hanesbrands Inc. reported first-quarter 2009 results yesterday and announced it will start production at its new Chinese knitting facility later this year.
Earnings per diluted share in the quarter decreased to a loss of $0.20. Excluding actions, non-GAAP earnings per diluted share were $0.03, down $0.39 from a year ago amid tight cost control but lower sales. Total net sales decreased by 13 percent to $857.8 million, as expected due to conditions in the retail marketplace.
"Our overall results were in line with our expectations and were significantly impacted by the economic recession," Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said. "Sales declined in the quarter at a rate consistent with what we had communicated to investors, and we tightly controlled expenses to mitigate the impact of reduced consumer spending. The second quarter looks as if both the sales and operating profit rate of decline could improve."
After assessing product demand modelling, the company has decided to start production at its new Nanjing, China, knitting plant on October 12, 2009. The plant is the company's first company-owned fabric manufacturing facility in Asia and will support the company's product sewing operations in Southeast Asia.
In March, Hanesbrands announced that it amended its first-lien credit agreement with debt holders to delay the covenant's most restrictive debt-leverage ratio from the fourth quarter 2009 until the third quarter 2011. Based on its cash-flow expectations, the company reiterates its goal to reduce its long-term debt by at least $300 million in 2009 and its goal to reduce its year-end inventory by $150 million.
The company also announced today that it will continue to exercise tight cost controls in light of the economic environment and will lay off 250 management employees. The company expects to incur restructuring and related charges, including severance costs, totalling approximately $15 million, primarily in the second quarter of fiscal 2009.
"So far, this year is unfolding as we thought," Noll said. "We are conservatively managing costs and inventory while we continue execution of our key strategies, including debt reduction of $300 million this year."
Hanesbrands Inc. is a leading marketer of innerwear, outerwear and hosiery apparel under strong consumer brands, including Hanes, Champion, Playtex, Bali, Just My Size, barely there and Wonderbra. The company designs, manufactures, sources and sells T-shirts, bras, panties, men's underwear, children's underwear, socks, hosiery, casual wear and activewear. Hanesbrands has approximately 45,000 employees in more than 25 countries.
Author: Billy Hunter