Shares of Hanesbrands (NYSE: HBI) were surging today after the maker of apparel basics reported strong fourth-quarter results, topping analyst estimates across the board. As a result, the stock was up 19.2% as of 2:10 p.m. EST.
Hanesbrands, which also owns brands like Champion, Playtex, and Maidenform, said revenue was up 7.5% in the quarter to $1.77 billion, easily beating expectations at $1.71 billion, as constant-currency organic sales increased 6%.
Image source: Hanesbrands.
Champion, which has been experiencing a resurgence lately, helped drive overall performance as the brand posted strong double-digit sales growth and helped U.S. activewear sales increase 13%. The international segment also outperformed, with sales increasing 12% and operating income rising 28%. On an annual run-rate basis, international is now the company's biggest business.
While innerwear sales were flat, activewear and international boosted adjusted operating profit up 10%. Adjusted earnings per share, however, fell from $0.52 to $0.48, ahead of expectations at $0.46, but that was due to a higher tax rate from a year ago. Adjusting for that, EPS was up 12%. The company also reduced its debt load by $403 million to $3.8 billion.
CEO Gerald Evans summed up the performance, saying, "We had a strong fourth quarter with organic sales growth, margin expansion, double-digit operating profit growth, strong cash generation, and significant debt and leverage reduction."
Looking ahead, Hanesbrands sees modest growth in 2019, with full-year revenue expected to rise about 2% to $6.885 to $6.985 billion. On the bottom line, it projected adjusted EPS of $1.72 to $1.80, up from $1.71 in 2018. Analysts were expecting $6.79 billion in revenue and $1.80 in earnings per share for the year.
Hanesbrands is known as a slow-growth, defensive, dividend-paying stock, so 7% revenue growth is unusually strong for the company. If the apparel maker continues to see solid growth from Champion and the international segment, I wouldn't be surprised to see it top its 2019 forecast.
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