The company’s net sales increased by 14% to US 1.2 billion in the first quarter 2015, while adjusted operating profit excluding actions increased by 16% to US 133 million and adjusted EPS excluding actions increased by 16% to US 0.22.

The record first-quarter financial results reflect the benefits of the company’s multiyear acquisition strategy and continued improvement in base business operating margin.

Successful acquisition strategy

On a GAAP basis, operating profit increased by 25% to US 90 million and EPS increased by 30% to US 0.13. “We are off to a great start in 2015, once again delivering a double-digit increase in EPS, while tracking to our full-year growth plans,” commented Richard A. Noll, Hanes Chairman and Chief Executive Officer.

“Our acquisition strategy continues to create value with DBApparel, Maidenform and Gear for Sports all contributing substantially to our double-digit growth. In addition, we are raising our 2015 performance outlook to reflect the recent acquisition of Knights Apparel.”

Since the end of the first quarter, Hanes closed on the acquisition of Knights Apparel, a leading seller of licensed collegiate logo apparel in the mass retail channel. Hanes has increased its full-year 2015 guidance to reflect the expected contributions from Knights Apparel and has updated its expectations for currency exchange rates for the rest of the year.

Key segment highlights

Innerwear net sales decreased by 4% in the first quarter, while adjusted operating profit increased by 13% primarily as a result of strong Maidenform cost synergies. The result was a 310-basis-point improvement in segment operating margin compared with the year-ago quarter. The decline in net sales was due to a retailer’s inventory reduction of approximately two weeks of supply, which has already begun to reverse in early April.

Activewear net sales increased by 1% in the first quarter, while adjusted operating profit decreased by 3%. Results were affected by the timing of Champion retail space gains for 2015, many of which will occur in the second quarter.

Despite currency headwinds and Target’s exit from Canada, International sales and operating profit increased significantly, with strong contributions from DBApparel, Japan and Latin America.

Financial guidance

Overall, first-quarter results were consistent with the company’s expectations. Hanes has increased its full-year 2015 growth expectations and financial guidance. For 2015, Hanes expects net sales of approximately US 5.9 billion to US 5.95 billion, up from previous guidance of US 5.775 billion to US 5.825 billion. The company expects approximately US 160 million in added sales from Knights Apparel, while the further deterioration since January in currency-exchange-rate expectations will reduce previous sales guidance by approximately US 35 million.

Adjusted operating profit is expected to be US 853 million to US 873 million. The guidance reflects a contribution of approximately US 18 million in adjusted operating profit from Knights Apparel.

Guidance for adjusted EPS excluding actions has increased to a range of US 1.61 to US 1.66, up from previous guidance of US 1.58 to US 1.63, as a result of a US 0.03 expected contribution from Knights Apparel.

www.hanes.com