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This excerpt taken from the HBI 10-Q filed May 11, 2009. Gross
Profit
Our gross profit was lower by $87 million in the first
quarter of 2009 compared to the first quarter of 2008. Gross
profit was lower due to lower sales volume of $48 million,
unfavorable product sales mix of $20 million, higher cotton
costs of $15 million, higher other manufacturing costs of
$15 million, higher production costs of $12 million
related to higher energy and oil-related costs including freight
costs, other vendor price increases of $5 million, a
$5 million unfavorable impact related to foreign currency
exchange rates, higher sales incentives of $3 million and
$3 million of higher
start-up and
shutdown costs associated with the consolidation and
globalization of our supply chain. The unfavorable foreign
currency exchange rate impact in our International segment was
primarily due to the strengthening of the U.S. dollar compared
to the Canadian dollar, Mexican peso, Brazilian real and Euro.
The cotton prices reflected in our results were 74 cents per
pound in the first quarter of 2009 as compared to 54 cents per
pound in the first quarter of 2008. Energy and oil-related costs
were higher due to a spike in oil-related commodity prices
during the summer of 2008. Our results will continue to reflect
higher costs for cotton and oil-related materials until these
costs cease to be reflected on our balance sheet in the first
half of 2009 and we start to benefit in the second quarter from
lower cotton costs and in the second half of 2009 from lower
oil-related material costs. After taking into consideration the
cotton costs currently included in inventory and short-term
supply agreements, we expect our cost of cotton to average 55
cents per pound for the full year of 2009 compared to 65 cents
per pound for 2008. In addition, in connection with the
consolidation and globalization of our supply chain, we incurred
one-time restructuring related write-offs of $3 million in
the first quarter of 2009 for stranded raw materials and work in
process inventory determined not to be salvageable or
cost-effective to relocate.
These higher expenses were partially offset by higher product
pricing of $26 million before increased sales incentives,
savings from our cost reduction initiatives and prior
restructuring actions of $12 million and lower on-going
excess and obsolete inventory costs of $5 million. In an
effort to mitigate the impact of rising
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input costs on our operating results, we raised domestic prices
effective in February 2009. We implemented an average gross
price increase of four percent in our domestic product
categories. The range of price increases varies by individual
product category. The lower excess and obsolete inventory costs
in the first quarter of 2009 are attributable to both our
continuous evaluation of inventory levels and simplification of
our product category offerings since the spin off. We realized
the benefits of driving down obsolete inventory levels through
aggressive management and promotions and realized the benefits
from decreases in style counts in our various product category
offerings.
As a percent of net sales, our gross profit was 30.1% in the
first quarter of 2009 compared to 34.9% in the first quarter of
2008, declining as a result of the items described above.
This excerpt taken from the HBI 10-Q filed Oct 31, 2008. Gross
Profit
Our selling, general and administrative expenses were
$2 million higher in the nine months of 2008 compared to
2007. Our cost reduction efforts resulted in lower expenses in
the nine months of 2008 compared to 2007 related to savings of
$16 million from our prior restructuring actions primarily
for compensation and related benefits, lower non-media related
MAP expenses of $5 million, lower stock compensation
expense of
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$4 million and lower accelerated depreciation of
$3 million. In addition, spin off and related charges of
$3 million recognized in 2007 did not recur in 2008. In
addition, our pension income of $8 million was higher by
$4 million which included an adjustment that reduced
pension expense in 2007 related to the final separation of our
pension assets and liabilities from those of Sara Lee.
Our media related MAP expenses were $4 million higher in
the nine months of 2008 primarily to support the launch of
Hanes No Ride Up Panties and marketing initiatives for
Champion and Playtex in the first half of 2008.
MAP expenses may vary from period to period during a fiscal year
depending on the timing of our advertising campaigns for retail
selling seasons and product introductions. We experienced higher
technology consulting and related expenses of $11 million,
higher computer software amortization of $4 million, higher
distribution expenses of $5 million and higher bad debt
expense of $7 million primarily related to the
Mervyn’s bankruptcy in the nine months of 2008 compared to
2007. Approximately half of the higher distribution expenses in
the third quarter of 2008 compared to 2007 were postage and
freight related and the other half related to rework expenses in
our distribution centers. We also incurred higher expenses of
$2 million in the nine months of 2008 compared to 2007 as a
result of opening 10 retail stores over the last 12 months.
In addition, we incurred $6 million in amortization of gain
on curtailment of postretirement benefits in the nine months of
2007 which did not recur in 2008.
Our cost reduction efforts have allowed us to offset higher
investments in our strategic initiatives of higher technology
consulting expenses of $6 million and higher MAP expenses
of $4 million during the nine months of 2008 compared to
2007.
This excerpt taken from the HBI 10-Q filed Aug 1, 2008. Gross
Profit
As a percent of net sales, our gross profit percentage was 35.2%
in the six months of 2008 compared to 33.3% in 2007. The higher
gross profit percentage was primarily due to $24 million of
savings from our cost reduction initiatives and prior
restructuring actions, lower accelerated depreciation of
$11 million, a $10 million
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favorable impact related to foreign currency exchange rates,
$9 million of lower production costs and lower sales
incentives of $5 million. The favorable foreign currency
exchange rate impact in our International segment was primarily
due to the strengthening of the Euro, Canadian dollar, Japanese
yen and Brazilian real.
These lower costs were primarily offset by $43 million of
lower sales volume, higher freight costs of $7 million,
$2 million of unfavorable product sales mix and lower
product sales pricing of $2 million.
Our per pound cotton costs were $1 million higher in the
six months of 2008 as compared to 2007. The cotton prices
reflected in our results were 58 cents per pound in the six
months of 2008 as compared to 57 cents per pound in 2007. After
taking into consideration the cotton costs currently included in
inventory, we expect our cost of cotton to average 66 cents per
pound for the full year 2008.
This excerpt taken from the HBI 10-Q filed May 7, 2008. Gross
Profit
As a percent of net sales, our gross profit percentage was 34.9%
in the first quarter of 2008 compared to 32.7% in 2007. The
higher gross profit percentage was primarily due to
$11 million of savings from our cost reduction initiatives
and prior restructuring actions, $11 million of lower
production costs, a $5 million favorable impact related to
foreign currency exchange rates, and lower accelerated
depreciation of $3 million. The favorable foreign currency
exchange rate impact in our International segment was primarily
due to the strengthening of the Canadian dollar, Euro, Japanese
yen and Brazilian real.
These lower costs were partially offset by $19 million of
lower sales volume, higher freight costs of $5 million
primarily due to a greater use of air freight and higher sales
incentives of $2 million.
Our per pound cotton costs were $2 million lower in the
first quarter of 2008 as compared to 2007. The cotton prices
reflected in our results were 54 cents per pound in the first
quarter of 2008 as compared to 56 cents per pound in 2007. After
taking into consideration the agreements that we currently have
in effect and cotton costs currently included in inventory, we
expect our cost of cotton to average 66 cents per pound for the
full year 2008.
These excerpts taken from the HBI 10-K filed Feb 19, 2008. Gross
Profit
As a percent of net sales, gross profit percentage decreased to
32.0% for the six months ended December 30, 2006 from 32.9%
for the six months ended December 31, 2005. The decrease in
gross profit percentage was due to $21 million in
accelerated depreciation as a result of our announced plans to
close four textile and sewing plants, higher cotton costs of
$18 million, $15 million of unusual charges primarily
to exit certain contracts and low margin product lines and an
$11 million impact from lower manufacturing volume. The
higher costs were partially offset by $38 million of net
favorable spending from our prior year restructuring actions,
manufacturing cost savings initiatives and a favorable impact of
shifting certain production to lower cost locations. In
addition, the impact on gross profit from lower net sales was
$16 million.
Gross Profit
As a percent of net sales, gross profit percentage decreased to 32.0% for the six months ended December 30, 2006 from 32.9% for the six months ended December 31, 2005. The decrease in gross profit percentage was due to $21 million in accelerated depreciation as a result of our announced plans to close four textile and sewing plants, higher cotton costs of $18 million, $15 million of unusual charges primarily to exit certain contracts and low margin product lines and an $11 million impact from lower manufacturing volume. The higher costs were partially offset by $38 million of net favorable spending from our prior year restructuring actions, manufacturing cost savings initiatives and a favorable impact of shifting certain production to lower cost locations. In addition, the impact on gross profit from lower net sales was $16 million. This excerpt taken from the HBI 10-Q filed Nov 5, 2007. Gross
Profit
As a percent of net sales, our gross profit percentage was 32.6%
in the nine month period in 2007 compared to 33.3% in the same
nine month period in 2006. The lower gross profit percentage was
primarily due to $25 million in higher accelerated
depreciation, higher cotton costs of $22 million and higher
excess and obsolete inventory costs of $17 million. Cotton
prices, which were approximately 45 cents per pound in the first
half of 2006, returned to the historical average of
approximately 55 cents per pound in the second half of calendar
2006 and the first nine months of 2007. These higher costs were
offset primarily by savings from our cost reduction initiatives
and prior restructuring actions of $24 million, lower
allocations of overhead costs of $22 million, and lower
duty costs of $12 million primarily due to the receipt of
$7 million in duty refunds relating to duties paid several
years ago.
The higher excess and obsolete inventory costs in the nine month
period in 2007 compared to the same nine month period in 2006
are primarily attributable to such costs having been unusually
low during the prior year third quarter, in which we were
completing our spin off. Since the spin off we have a renewed
focus on both inventory level reductions and simplification of
our product offerings that has not resulted in significantly
higher excess and obsolete inventory costs. The higher
accelerated depreciation in the nine month period in 2007 was a
result of facilities closed or that will be closed in connection
with our consolidation and globalization strategy.
This excerpt taken from the HBI 10-Q filed Aug 3, 2007. Gross
Profit
As a percent of net sales, our gross profit percentage was 33.3%
in the six month period in 2007 compared to 33.6% in the same
six month period in 2006. The lower gross profit percentage was
primarily due to higher cotton costs of $18 million and
$18 million in accelerated depreciation. Cotton prices,
which were approximately 45 cents per pound in the first half of
2006, have returned to the historical average of approximately
55 cents per pound in the second half of calendar 2006 and the
first half of 2007. These higher costs were offset primarily by
lower allocations of overhead costs of $15 million, savings
from our cost reduction initiatives and prior restructuring
actions of $11 million and the receipt of $7 million
in duty refunds relating to duties paid several years ago. The
accelerated depreciation was a result of facilities closed or
that will be closed in connection with our consolidation and
globalization strategy.
This excerpt taken from the HBI 10-Q filed May 14, 2007. Gross
Profit
As a percent of net sales, our gross profit percentage decreased
to 32.7% in the first quarter of 2007 from 33.0% in the same
quarter in 2006. The decrease in gross profit percentage was
primarily due to higher cotton costs of $10 million,
$5 million in accelerated depreciation and higher excess
and obsolete inventory costs of $4 million. Cotton prices,
which were approximately 45 cents per pound in the first half of
2006, returned to the historical average of approximately 55
cents per pound in the second half of calendar 2006 and the
first quarter of 2007. These higher costs were offset primarily
by lower spending in numerous areas resulting from our prior
year restructuring actions and cost savings initiatives of
$14 million and lower allocations of overhead costs
$7 million. The accelerated depreciation was a result of
actions approved in the first quarter of 2007 to close two
textile manufacturing plants and two distribution centers in the
United States and previously approved actions that were
completed during the first quarter of 2007.
This excerpt taken from the HBI 10-Q filed Nov 13, 2006. Gross
Profit
As a percent of net sales, gross profit percentage increased
from 32.5% for the quarter ended October 1, 2005 to 32.7%
for the quarter ended September 30, 2006. The increase in
gross profit percentage was due to manufacturing cost saving
initiatives of $20 million and a $6 million favorable
impact from shifting certain production to lower cost locations.
These changes were partially offset by a $10 million impact
from an unfavorable shift in product mix, higher cotton costs of
$8 million, a $6 million impact from lower
manufacturing volume and $4 million in accelerated
depreciation as a result of our announced plans to close two
facilities in the United States and one in Mexico.
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