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Why Acquisitions Could Drive Hanesbrands’ 1Q17 Top Line

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Talking about fiscal 2017 top line

With trailing 12-month sales of more than $6 billion, HanesBrands (HBI) is one the largest marketers of basic apparels in the United States. The company reported a 5% YoY (year-over-year) increase in its fiscal 2016 top line, driven largely by acquisitions in Europe, Japan, and Australia.

For fiscal 2017, management has predicted $6.45 billion to $6.55 billion in total sales—8% growth at the midpoint. Acquisitions are expected to contribute $420 million–$430 million toward the top line, which would be around 90% of the total sales increase. About $410 million of this benefit would be incurred in the first half of the year. Organic sales are likely to remain flat or grow up to 2%.

Currency headwinds are likely to continue into 2017. Currency is expected to taper the top line by around $30 million–$40 million.

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Online channel to drive sales in 2017

The company is looking for strong double-digit growth in its online business. Management plans to broaden its product offerings across the online channel and shift the media budget toward this channel. Around half of this media spending is likely to go toward the digital channel in 2017.

How will the first quarter look?

For the first quarter, which the company reports on May 2, total sales are expected to rise 13% YoY to $1.38 billion. As we have outlined, the majority of the growth will likely be acquisition-driven. Organic sales are likely to fall during the quarter. Read the next part of this series to learn about the expected performance of the company’s key segments.

Investors wanting to get exposure to HBI can consider pooled investment vehicles like the iShares Morningstar Mid-Cap Growth ETF (JKH), which invests 0.55% of its portfolio in HBI.

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