HanesBrands, Winston-Salem, N.C., on Wednesday reported its financial results for the fourth quarter and fiscal year ended Dec. 31, 2011. Net sales for the year were up 7 percent, to $4.64 billion, with net income of $266.7 million. Despite the overall increase, fourth-quarter numbers saw decreases due to a large and unexpected sales slowdown in December.
“We achieved record earnings and sales in 2011 with strong performance in several of our categories, including underwear and socks, although we were disappointed with late fourth-quarter softness that yielded results below our expectations,” said Richard A. Noll, chairman and chief executive officer of Hanes. “For 2012, we expect to get through the challenges of the inflation overhang and outerwear wholesale issues while we focus on core growth and delivering strong free cash flow that will be used to reduce long-term debt.”
Although the fourth quarter saw slight net sales decreases in most categories, full year sales were up almost across the board. However, profitability in each segment was more mixed, with the outerwear segment seeing an almost 35 percent decrease for the quarter. The outerwear segment, which includes the Hanes Imagewear business that works with the wholesale and screen-printer markets, has suffered due to the combination of competitive pricing and high cotton costs in 2011. Even though full-year profitability for the sector was up 54 percent, the company believes the fourth-quarter change for outerwear was indicative of future market trends.
“Outerwear’s imagewear category is being adversely affected by hypercompetitive pricing in the wholesale screen-print market,” Hanes said in a statement.”The company believes pricing in the market’s basic-product promotional sector may remain problematic, and in response Hanes will de-emphasize the promotional basic sector while maintaining its presence in the more profitable premium-product and core-product sectors where the company has a stronger position.”
“Pricing, coupled with historically high cotton costs, will make imagewear unprofitable for the year, especially in the first quarter. As the company reduces its exposure to the promotional sector, imagewear is expected to become smaller but more profitable and less volatile,” the press release stated.
Following changes to the imagewear segment, Hanes projects 2 to 4 percent growth for the entire company over the next 12 months, with first quarter net sales estimated at approximately $1 billion.
To see the full fiscal results press release, visit HanesBrands’ corporate website.
