The result of these actions is our newly named branded printwear, which should be a smaller, but more profitable and less volatile, where we remain committed to growing both the Hanes and Champion brands. We believe this is the right strategy for the category going forward and in hindsight only regret not taking these actions sooner.
Our other major derisking strategy is strengthening our balance sheet by focusing on cash generation and debt reduction. Through the first half of 2012, inventory is falling, free cash flow is strong, we continue to pay down debt, and we remain committed to further reducing bond debt to $1 billion by the end of 2013. These actions by themselves should not only significantly reduce volatility, but also power EPS growth, especially in 2014.
Turning to our core business, we have successfully managed through a significant cotton bubble. In 2011, cotton inflation impacted us by about $200 million and 2012 has seen a similar headwind through the first half. With that now behind us, we are pleased to see our margins returning to historical levels.
The best evidence of how we have navigated through the cotton bubble is innerwear. We saw at least mid-single-digit sales growth with our top three customers and our substantial profit turnaround as first-half operating margins were only 70 basis points below last year’s first half, when cotton was over 50% lower.Read the rest of this transcript for free on seekingalpha.com
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV