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Hanesbrands’ Q4 profit sinks 64 percent, eliminating 310 positions
Hanesbrands (NYSE: HBI), parent of Duofold, said its fiscal fourth-quarter profit fell 64 percent, hurt by lower sales and by charges related to its restructuring. It added that it would be cutting 310 jobs.
For the quarter ended Jan. 3, profit dropped to $17.9 million, or $0.19 per share, from $49.8 million, or $0.52 per share a year earlier. Excluding a $0.31-per-share charge for restructuring and related items, it earned $0.50 per share.
Revenue fell 11 percent to $1.04 billion from $1.16 billion last year. The company said sales declined in each business segment.
For the full year, total net sales were down by 5 percent to $4.25 billion, compared with $4.47 billion a year ago. For the year, GAAP diluted EPS was $1.34 versus $1.30 a year ago, and non-GAAP EPS increased by 27 percent to $2.09.
Hanesbrands said it prepaid $139 million of long-term debt in the fourth quarter, compared with its goal of $75 million to $125 million. The company ended the year with inventory of $1.3 billion, saying it was about $50 million better than its goal. And the company ended the year with a similar level of cushion in its bank covenant debt-to-EBITDA ratio as it had at the end of the third quarter.
The company, which has about 45,000 employees, also said that it will close its Barnwell, S.C., sock-knitting plant by the end of April, and move production to El Salvador. Approximately 310 jobs will be eliminated.
Hanesbrands said it has been shifting its manufacturing activity from the United States to Asia to reduce costs — a move that has led to layoffs and closure of plants in North America over the past few months.
The company said rising commodity costs and the weak retail environment were partly offset by inventory control, cost cutting, a price increase and other factors.
Hanesbrands did not give guidance for its future performance but said it expects a continued weak environment in fiscal 2009 to be offset by lower commodity costs and savings from restructuring.
Eddie Bauer reduces board size, trims compensation
In an effort to cut costs, Eddie Bauer Holdings (Nasdaq: EBHI) said it will reduce the size of its board from 10 to seven and “significantly reduce” compensation for board members.
Three members of the board — Howard Gross, Paul Kirincic and Ed Straw — volunteered not to stand for re-election for a new term in May. The board’s size will be reduced to seven members, effective on the three directors’ last day of service.
Each member’s compensation will be lowered by 50 percent as part of the company’s plan to trim expenses in a tough retail environment. Also, Eddie Bauer decided to reduce the value of annual equity grants for board service and defer the 2009 annual equity award for board service.
The downsizing of the board and reduction in compensation is an additional effort by the company to reduce overall costs. In 2008, the company cut $45 million to $50 million in costs and said it plans to lower additional expenses by $10 million to $15 million this year.
–Compiled by Wendy Geister
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