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HanesBrands (NYSE: HBI), a leading marketer of everyday branded basic apparel, today reported financial results for its fourth quarter and fiscal year ended Dec. 31, 2011.
For fiscal 2011, net sales increased 7 percent to $4.64 billion versus a year ago. Net income was $266.7 million, or $2.69 per diluted share, an increase of 25 percent over 2010 EPS of $2.16. For the fourth quarter, earnings and sales growth were affected by an unexpected and substantial slowing of orders in December because of retailer inventory management. Net sales in the quarter decreased slightly to $1.15 billion, and earnings per diluted share were $0.41. Hanes also prepaid $200 million of floating-rate notes in the fourth quarter, reducing long-term debt to $1.8 billion.
For 2012, Hanes expects its core categories to deliver solid results despite inflation and expects to generate record free cash flow. The company expects the wholesale category of its Outerwear segment to lose money because of hypercompetitive pricing and reduce EPS by approximately $0.30, resulting in expected 2012 EPS of $2.50 to $2.60. Net sales in 2012 are expected to increase approximately 2 percent to 4 percent, and free cash flow is expected to total between $400 million and $500 million. The challenges of inflation and the Outerwear wholesale category will primarily be first-half issues, and the company expects to return to normalized profitability no later than the second half.
“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,” Hanes Chairman and Chief Executive Officer Richard A. Noll said. “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.”