Shares of Hanesbrands, Inc. (HBI) reached a new 52-week high of $107.87 on Sep 5 after the company raised its fiscal guidance following the completion of the DBApparel (DBA) takeover.
In fact, shares of this apparel retailer has been on the rise for the past few months as it has been reporting decent earnings results backed by its margin-enhancing Innovate-to-Elevate strategy. Shares of this textile retailer eventually closed at $104.65, recording a healthy year-to-date return of 54.2%.
Growth Drivers
On Sep 3, 2014, Hanesbrands raised its earnings and sales guidance for fiscal 2014 following the completion of takeover of Europe-based intimate apparel company DBApparel on Aug 29, 2014 for €400 million or $528 million. Hanesbrands expects to start the integration of DBA immediately
For fiscal 2014, Hanesbrands expects net sales to be within $5.35 to $5.38 billion, up from approximately $5.08 billion as expected earlier. The company expects operating profit in the range of $735 to $755 million as against the previous guidance range of $710 to $730 million. Hanesbrands expects the DBA acquisition to also have a positive effect on the company’s corporate tax rate.
Hanesbrands has also raised its earnings per share guidance to a range of $5.40 to $5.60 from $5.20 to $5.40. The raised guidance reflects DBA’s contributions to sales, adjusted operating profit and corporate tax rate. However the takeover is expected to increase the interest expense of the company.
Further, Hanesbrands’ focus on innovation, emphasis on higher-priced and higher-margin products, lower cotton costs and prudent expense management are expected to drive solid results in the second half of 2014.
Hanesbrands sports a Zacks Rank #1 (Strong Buy). The company is on a roll with two back-to-back acquisitions in the past one year. The DBA acquisition was preceded by the buyout of underwear apparel chain, Maidenform Brands Inc. in Oct 2013. These frequent strategic takeovers will bolster its presence in the global intimate apparel and hosiery category.
Other stocks to consider in the apparel industry include Crocs, Inc. (CROX), Perry Ellis International Inc. (PERY) and Michael Kors Holding Limited (KORS). All these stocks carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment