Hanesbrands Inc. reported yesterday its second quarterly loss of 2009, driven primarily by restructuring and other expenses taken during the fourth quarter and a slight decrease in sales.
The company reported a 4.5 percent drop in revenue to $998 million, including declines in its five primary sales categories.
It posted an earnings loss of 1 cent a share, compared with earnings of 19 cents in the fourth quarter of 2008. Factored into the quarterly loss was $42.8 million in "other expenses" and $7.6 million in restructuring charges.
Matt Hall, a spokesman for Hanesbrands, said that the $42 million in other expenses is related to the "writing off of fees and termination expenses related to the old debt structure that was replaced with the new refinancing" put into place in December.
Excluding those charges and expenses, Hanesbrands had 56 cents in earnings, which matched the average forecast by analysts surveyed by Zacks Investment Research. Most analysts do not include restructuring charges in their earnings forecasts.
Hanesbrands reported its quarterly performance after the stock market closed yesterday. Its share price closed at $23.16, up 16 cents.
The company preferred yesterday to focus its attention on reaffirming its projection of a 5 percent rise in sales, which could be worth $200 million. The sales would be gained from a significant increase in shelf space with key retail customers, such as Wal-Mart, Target and Kohl's.
"We successfully navigated the recession of 2009 and emerged with momentum for growth in 2010," Richard Noll, the chairman and chief executive of Hanesbrands, said in a statement.
Part of Hanesbrands' strategy for 2009 was eliminating 855 jobs in North Carolina, including 705 in the Triad, as it moved more production either offshore or to third-party vendors. Some of the 240 jobs being eliminated at the historic Weeks plant in Winston-Salem are not scheduled to be cut until the end of 2010.
For the full year, Hanesbrands had net income of $51.3 million, down nearly 60 percent. Its earnings were 54 cents a share, down from $1.34 in fiscal 2008.
"We have potential for significant earnings growth in 2010," Noll said.
"When you combine the benefits of expected sales growth, operating margin improvement and lower interest expense, we could see earnings per share growth of at least 25 percent and possibly up to 35 percent or more.
"To reach the higher levels of growth, we may need a slight increase in overall consumer-spending levels, potential price increases to offset any systemic inflation, or additional effective use of free cash flow," he said.
rcraver@wsjournal.com
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