Why Hanesbrands' Shares Jumped

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Hanesbrands (NYS: HBI) were stretched higher today, gaining as much as 10% in intraday trading after the company's second-quarter results topped expectations.

So what: The baron of briefs reported a drastic year-over-year drop in GAAP profit -- from $87 million last year to just over $1 million this year -- however, most of that decline was due to costs associated with the company's exit from its imagewear businesses. Excluding those costs, the company earned $0.67 per share, which was easily better than the $0.49 analysts were expecting. Revenue grew 1% from the second quarter of 2011 to $1.18 billion.


Now what: Though earnings per share topped expectations, they were still down 14% from last year thanks to "substantially higher cotton costs." When you sell a broad variety of largely cotton garments, higher cotton prices are particularly painful. However, in its statement, the company said, "With the majority of cotton inflation behind the company, Hanes expects solid results for the second half of 2012." For the full year, the company offered up guidance that was roughly in line with Wall Street's expectations on the bottom line, but a bit light on sales.

Want to keep up to date on Hanesbrands?Add it to your Watchlist.

The article Why Hanesbrands' Shares Jumped originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferhas no financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter,@KoppTheFool, or onFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners