Boston, MA 05/07/2014 (wallstreetpr) – There are widespread reports that cotton prices are rising and have already hit two-year high levels. When such reports come, attention gets directed to companies such as Hanesbrands Inc. (NYSE:HBI) that rely on cotton for their quality production.
Investors usually get concerned that an increase in cotton prices would lead to high operating costs and expenses that have the potential of impacting profit. Furthermore, high cotton prices also have the potential of causing an increase in product costs that can keep away customers, therefore, impacting revenue.
The issue about high cotton prices in the current case is connected to low supply and high demand for the commodity. And concerns are heightened by the fact that correcting the supply-demand imbalance in this case might take several months as new crops mature.
However, Hanesbrands Inc. (NYSE:HBI) has come out to allay fears that its production or even product prices will be impacted by the current inflation in cotton prices. The company’s CEO Richard A. Noll said the company takes precautionary measures well in advance to ensure that cotton price fluctuations do not impact production quality, costs or product prices.
2014 production locked
Hanesbrands Inc. (NYSE:HBI) believes that no amount of cotton price fluctuations will impact its performance in fiscal 2014. The company said it already has enough of materials that it requires for the whole of 2014 production needs. The company closely tracks the market changes and takes early measures just in case the changes in the market end up becoming adverse.
Biting cotton shortages or price hikes more often than not lead clothing makers to turn their attention to usually cheaper options such as polyester, a move that eventually result to a glut in the cotton market.
Hanesbrands 1Q in summary
Hanesbrands Inc. (NYSE:HBI) experienced strong 1Q performance supported by acquisition and operation improvements. The company witnessed sales up 12 percent to $1.06 billion. Net income in the quarter came in at $114 million, up 34 percent, and reflected 76 cents per share.
