Hanesbrands Inc. to Highlight Expectations for 2010 Sales Growth of 5 Percent to 8 Percent and Earnings Per Share Growth of 25 Percent to 35 Percent at Investor Day Meeting.(Company overview)

Hanesbrands Inc. (NYSE: HBI) announced that it could double diluted earnings per share over the next three to four years based on expectations for 2010 net sales growth of 5 percent to 8 percent and earnings per share growth of 25 percent to 35 percent coupled with long-term annual growth targets.

Management will discuss its growth expectations and targets along with sales, marketing and supply-chain initiatives at an investor meeting to be held at 9 a.m. EST today at the Jumeirah Essex House in New York City. The meeting, which will end by noon, will also be webcast on the Internet, accessible at www.hanesbrands.com.

The company's expectation for 2010 sales growth is based on significant shelf-space and distribution gains and a potential rebound in consumer spending. Expectations for EPS growth in 2010 depend on these increased sales, continued cost reduction and effective use of free cash flow.

"Hanesbrands is at an inflection point to begin realizing its significant growth potential," Hanesbrands Chairman and Chief Executive Officer Richard A. Noll said. "We have spent the last few years building a strong growth platform that utilizes our big brands to drive top-line growth domestically and internationally, a low-cost global supply chain to drive margin improvement, and strong cash flow to support multiple strategies for earnings growth. We see very strong growth in 2010 and are targeting consistently strong growth for the longer term."

For 2011 and beyond, the company has long-term annual growth targets supported by its growth platform of big brands, low-cost supply chain and strong cash flow.

Annual net sales growth target range of 2 percent to 4 percent.

Annual EPS growth target range of 10 percent to 20 percent.

"As we leverage our growth platform, we have the potential to double EPS over the next three to four years by increasing sales, improving operating margins and effectively using our cash flow," Hanesbrands Executive Vice President and Chief Financial Officer E. Lee Wyatt said.

At the investor meeting, the company will illustrate different scenarios in which it could achieve EPS of $3 or $4 using multiple planning assumptions. That compares with EPS excluding actions of $1.66 in 2009. The illustrations and the company's forward-looking expectations and planning assumptions expressed in this press release and at the investor meeting are based on a business climate of modest economic growth, moderate cost inflation and slowly increasing interest rates. Sales Growth Hanesbrands, which had sales of approximately $3.9 billion last year, has five major business segments: Innerwear, Outerwear, Direct to Consumer, Hosiery and International. Using big brands to drive top-line sales increases is the first plank of the company's growth platform.

The company has locked in shelf-space gains that are expected to generate approximately $200 million of additional sales in 2010, or 5 percent. With a consumer spending rebound, sales could increase up to another 3 percentage points, or $50 million to $100 million. Domestic Segments. In order to drive sales, Hanesbrands is using its consistent investment in its strong brands, a disciplined innovation process and integrated customer selling teams that use consumer insights.

"We have record shelf space gains for 2010 - the equivalent of 62 additional miles of shelf space as our customers look for brands and products that will help them increase sales and profits," Hanesbrands President, Chief Commercial Officer William J. Nictakis said. "By building upon this successful model and helping our retailers make these space gains more productive, we believe that we can consistently grow in 2011 and beyond."

Over the long term, the company believes that its Innerwear and Outerwear segments can sustain sales growth in the low to mid single-digit range, that its Direct to Consumer segment can grow in the high single-digit range, and that Hosiery segment sales may potentially flatten after declining by approximately 10 percent in 2010.

"Our scale and leading brands across multiple segments afford us the opportunity to meet face-to-face with our customer representatives at all levels - from buyer to president and CEO," Nictakis said. "Our focus on consumer insights and helping customers use our brands to improve their sales and profits is paying off with strong space and distribution gains across multiple customers." International Segment. The company's International segment businesses generated approximately 11 percent of the company's sales in 2009. These businesses are well positioned as innerwear product leaders in the strongest growing economies of the Americas and Asia.

"Our major International retail businesses operate in Mexico, Canada, Japan, India, Brazil and China where a substantial amount of gross domestic product growth outside the United States will be concentrated over the next 10 years," Hanesbrands President, International Business and Global Supply Chain Gerald Evans said. "We see a unique opportunity to integrate each of our international businesses into our global supply chain so that we are able to dramatically lower product costs, build share and expand into adjacent product categories."

The company has already begun using this model to integrate its Mexico retail operations into the company's global supply chain, resulting in double-digit sales growth last year and doubling of profits.

"We fully expect that our International sales will become another growth driver for Hanesbrands, growing mid single digits in 2010 and at an accelerated rate of high single digits to low double digits annually in the years ahead," Evans said. Low-Cost Supply Chain Hanesbrands has built a low-cost supply chain spanning both hemispheres that leverages its size and scale to create a competitive advantage in a global industry - the second plank of the company's growth platform. The company has three primary production centers located in the Caribbean Basin, Central America and Asia.

"The heavy lifting of building our supply chain is substantially behind us," Evans said. "We will benefit from cost savings for several more years, and there are more benefits through optimizing how it all works to drive further cost reductions and to lower working capital investment.

"Our supply chain is positioned to reach more than 70 percent of the world's GDP in a trade-advantaged manner. This becomes a powerful platform in which to continue to drive growth domestically and plug in our International businesses to create competitive advantage." Cash Flow, Leverage and Acquisitions Hanesbrands completed a debt refinancing in the fourth quarter of 2009 with the primary benefit of the new capital structure being flexibility in the use of the company's strong cash flow to create maximum value - the third plank in the company's growth platform.

"We have established a flexible long-term capital structure to support growth," Wyatt said. "Our debt structure is simpler and gives us greater flexibility to execute multiple strategies for earnings growth, including debt reduction and selective bolt-on acquisitions."

The company has generated significant amounts of free cash flow over the past three years and has the potential to increase its free cash flow over the next few years. Consistent growth at the high end of the company's long-term sales and EPS target ranges could result in $1 billion to $1.2 billion of cumulative free cash flow over the next few years as a result of increased EBITDA, lower cash interest and lower capital expenditures.

The company's goal is to substantially reduce its leverage by targeting a net debt level of 2 to 3 times EBITDA - down from 4.6 times at the end of 2009.

"We can make significant progress in achieving this target leverage during 2010," Wyatt said. "EBITDA growth alone in 2010 could reduce the ratio to 3.9 times. The use of free cash flow in 2010 could further reduce leverage to a range of 3.3 to 3.4 times through either debt reduction or a combination of debt reduction and a bolt-on acquisition. The leverage target of less than 3 times EBITDA could be achieved as early as 2011."

Hanesbrands will consider selective bolt-on acquisitions as one of its many opportunities to drive growth. Potential acquisitions would have to meet disciplined criteria of being in the core apparel essentials categories, generating cost savings that leverage the company's supply chain, providing upside revenue opportunities, involving minimal integration risk, being funded through free cash flow, being accretive in the first year, and delivering a superior cash return to shareholders.

"If we see the opportunity to purchase something at a good price that has supply chain synergies and growth potential, it could be a good way to create value," Noll said. "The ideal size would be around $200 million." Information for Business Modeling Hanesbrands is providing annual net sales and EPS growth guidance for 2010. The company also has a practice of providing an understanding of long-term targets, goals, strategies, trends, current financial performance and information that can be used to model the potential of the business.

Planning assumptions used to make forward-looking comments are based on modest economic growth, moderate cost inflation and slowly increasing interest rates. Sales. For 2010, Hanesbrands has reaffirmed that it expects sales growth of approximately 5 percent in 2010, led by significant shelf-space and distribution gains that will contribute stronger year-over-year growth in the first half. In the event of a consumer spending rebound, the sales increase could be a few percentage points higher, or an additional approximately $50 million to $100 million. Combining these two, the company would expect 2010 sales growth of 5 percent to 8 percent.

Keywords: Acquisitions, Advertising, Asia, Capital Investment, China, Consumer Spending, Economic Growth, Economics, Economies, Fashion, Finance, Financial, Gross Domestic Product, Hanesbrands Inc., India, Investing, Investment, Japan, Manufacturing, Marketing, Mergers, Retail, Textiles

This article was prepared by China Weekly News editors from staff and other reports. Copyright 2010, China Weekly News via VerticalNews.com.