Despite delivering its third straight year of record revenue, net sales for the three months ended Jan. 2 slipped 7.4% to $1.41 billion, down from the year-ago period’s $1.5 billion. Analysts polled by Thomson Reuters had projected $1.5 billion in revenue.
And while quarterly profit was up 33.2% to $119.2 million (more than last year’s $89.4 million but less than the previous quarter’s $162.2 million), or $0.30 per share, FactSet had anticipated $0.46.
“We delivered our third consecutive record year in 2015, although we are disappointed with our fourth-quarter performance,” Hanes chairman and chief executive officer Richard Noll said in a statement.
Core sales (stated in constant currency and excluding revenue from acquisitions) for both innerwear and activewear were down 2 percent and 12 percent respectively in the fourth quarter, driven by lower retail traffic in the U.S. resulting from warm weather in November and December. Hanes said this caused retailers to pull back on orders, impacting both replenishment and cold-weather goods shipments.
And while traffic improved toward the end of December and into January, it was too late to change the course of the quarter. In fact, net sales in the company’s innerwear segment fell 5.9% from $699.7 million to $658.4 million, while net sales in activewear were $368.1 million, down 1.3% from $372.97 million.
With that being said, Hanes is forecasting net sales to grow a paltry 1 percent to 3 percent in fiscal 2016 to between $5.8 billion and $5.9 billion. The company said this reflects additional incremental sales from completed acquisitions (it bought Maidenform in 2013 Maidenform acquisition, DBApparel in 2014 and licensed apparel leader Knights Apparel last year), as well as other factors, such as omnichannel programs and product enhancements.
The company also expects adjusted operating profit of $920 million to $950 million next year, citing continued synergies from acquisitions and supply chain internalization, including increased production operations in Vietnam and internalizing innerwear and activewear across its global supply chain.
In addition, Hanes is expecting net cash from operating activities to be in the range of $750 million to $850 million.
Noll continued, “For 2016, I feel confident in our growth expectations and outlook for a fourth consecutive year with a double-digit increase in adjusted EPS.”
Founded in 1901, the Winston-Salem, North Carolina-based apparel company currently sells T-shirts, bras, panties, shapewear, underwear, socks, hosiery and activewear under several labels, including Hanes, Champion, Playtex, Bali and Maidenform.