QUOTE AND NEWS
StreetInsider.com  Oct 20  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Management+Changes/HanesBrands+%28HBI%29+Adds+Former+Snyder%27s-Lance+CFO+as+Director/9924087.html for the full story.
Market Intelligence Center  Oct 10  Comment 
Option-trade picking algorithms patented by MarketIntelligenceCenter.com found a trading opportunity with Hanesbrands (HBI) that should provide a 3.80% return in just 99 days. Sell one Jan. '15 call at the $105.00 level for each 100 shares of...
SeekingAlpha  Oct 7  Comment 
By Zacks Investment Research: I’ll admit it. I have a problem. It’s not something I can easily shake off either. It’s deeply embedded in my psyche and a result of countless childhood experiences that have cemented themselves in my mind....
TheStreet.com  Oct 2  Comment 
NEW YORK (TheStreet) -- Hanesbrands shares are up 0.57 to $106.51 on Thursday after analysts at Credit Suisse initiated coverage on the shares with an "outperform" rating while setting a $125 price on the shares. The apparel company's shares...
Benzinga  Oct 2  Comment 
Analysts at DA Davidson initiated coverage on Salesforce.com (NYSE: CRM) with a neutral rating. The target price for Salesforce.com is set to $62. Salesforce.com's shares closed at $56.73 yesterday. Credit Suisse initiated coverage on shares of...
SeekingAlpha  Oct 2  Comment 
By BMD Asset Management and Research: Hanesbrands Inc (NYSE:HBI) reported strong second quarter numbers on July 23, 2014, causing analysts to revise their estimates higher for both this year and next. While the stock price has risen over 10% since...
Market Intelligence Center  Sep 29  Comment 
Hanesbrands (HBI) presents a trading opportunity that offers a 2.59% return in just 54 days. A covered call on Hanesbrands at the $105.00 level expiring on Nov. '14 offers an assigned return rate of 2.59% or 17.50% annualized. This trade offers...
Market Intelligence Center  Sep 26  Comment 
MarketIntelligenceCenter.com's patented trade-picking algorithms have identified an attractive covered-call trade on Hanesbrands (HBI). Look at the Nov. '14 $105.00 covered call for a net debit in the $101.40 area. This trade has a duration of 57...
Market Intelligence Center  Sep 24  Comment 
Hanesbrands (HBI) presents a trading opportunity that offers a 3.64% return in just 59 days. A covered call on Hanesbrands at the $105.00 level expiring on Nov. '14 offers an assigned return rate of 3.64% or 22.53% annualized. This trade offers...
TheStreet.com  Sep 12  Comment 
NEW YORK (TheStreet) -- RATINGS CHANGES Advisory Board was upgraded at Wells Fargo to outperform from market perform. Demand from hospitals for analytics software appears to be at an inflection point, Wells Fargo said. Chesapeake Energy was...




 

Hanesbrands manufactures and sells of low-cost innerwear (t-shirts, bras, and underwear) and hosiery.[1] The companies brands include: Hanes, Champion, Playtex, Bali, L’eggs, Just My Size, barely there, Wonderbra, Stedman, Outer Banks, Zorba, Rinbros and Duofold.[2] The company sells its products at wholesale prices to mass-market discount retailers like Wal-Mart and Target, as well as department stores. Hanes is heavily dependent on a few large customers. Wal-Mart (WMT), Target (TGT), and Kohl's (KSS) account for 27%,17%, and 7% respectively, of the company's sales.[3]

Hanes is one of the largest players in the innerware industry and enjoys economies of scale that allow it to offer its products at prices below those its competitors. This advantage has become especially important in recent years, as department stores have begun to offer their own private label brands. Private label brands typically provide department stores with higher margins than third party brands. Hanes is the exception to this rule because it is able to offer its products at prices below what it costs department stores to manufacture/purchase their own private label merchandise. The company earned $3.9 billion in revenue and $51 million in net income in 2009.[4]

Once a subsidiary of Sara Lee, Hanes was spun off in 2006 as part of a restructuring within the parent company. Since the spin-off, Hanes has struggled with increasing operational costs, steady decreases in its hosiery business, and over $2B in debt.

Company Overview

Hanesbrands designs, manufactures, sources and sells a broad range of apparel essentials such as T-shirts, bras, panties, men’s underwear, kids’ underwear, casualwear, activewear, socks and hosiery.The company generates 89% of its sales from within the United States and 81% from wholesales to retailers.

Business Segments[5]

  • Innerwear - focuses on core apparel essentials, and consists of products such as women’s intimate apparel, men’s underwear, kids’ underwear, and socks.
  • Outerwear - focuses on casualwear and activewear markets through the Hanes, Champion , Just My Size and Duofold brands, where the company offer products such as T-shirts and fleece.
  • Hosiery - the company is the largest market of women's sheer hosiery in the United States. The company markets hosiery products under its L’eggs, Hanes and Just My Size brands.
  • Direct to Customer - operations include our value-based (“outlet”) stores and Internet operations.
  • International - includes products that span across the Innerwear, Outerwear and Hosiery reportable segments and are primarily marketed under the Hanes, Champion, Wonderbra, Playtex, Stedman, Zorba, Rinbros, Kendall, Sol y Oro, Bali and Ritmo brands.
  • Other - primarily consists of sales of yarn to third parties in the United States and Latin America.

Business Growth

FY 2009 (ended January 2, 2010)[4]

  • Net sales fell 8% to $3.9 billion. The company attributes lower sales to the sluggish economy. Innerwear, Outerwear, Hosiery and International segment net sales were lower by 6%, 12%, 15%, and 12%, respectively.
  • Net income fell 60% to $51 million.

Trends and Forces

Department Store Consolidation

Department stores in the United States have undergone significant changes in response to declining margins. Stores have implemented tighter inventory controls and have scaled back the quantities of merchandise that they purchase from companies like Hanesbrands.

Besides competing with other major brands for department store business, Hanesbrands has to contend with the rise of private label merchandise as well. As private labels become an increasing part of department store sales, big companies may scale back on the traditional brands they order from companies like Hanesbrands. Although traditional brands will remain a vital part of the department store business, they have a strong incentive to prefer private labels wherever possible because they can be sold at higher margins than outside brands. As the low-cost undergarment industry is essentially commoditized (with cost being the biggest factor for consumers), companies have an even stronger incentive than is usual to create and sell private label undershirts and intimate apparel to keep costs low and margins high. However, Hanesbrands serves as a key exception to this trend: as a very large company that manufactures its own clothing, it can often price its product below private label merchandise.

In addition, a series of mergers and acquisitions in the industry (e.g. Macy’s takeover of Marshall Field's) give the businesses that remain potentially greater power to negotiate lower prices with Hanesbrands, thereby lowering revenue. With its high dependence of wholesaling, a small change in Hanesbrands’ business dealings with its large customers would greatly affect the company’s earnings.

Changes in Fashion Trends

Trends in the fashion world tend to change very quickly. Consumer tastes can vary widely from one season to the next, leading to large swings in a company's profits. On the whole, Hanesbrands is essentially immune from these fluctuations. Its basic undergarments are wardrobe staples and compete on the basis of price, not style. But in spite of this competitive advantage, Hanesbrands has been significantly exposed to changing fashion trends through its hosiery business. Today’s working women wears hosiery less then her mother did. The company’s own research shows that working-age women wear panty hose almost half as much as they did ten years ago. If this trend continues, the market for Hanes hosiery will continue to shrink, decreasing revenue.

Competition

Hanes' biggest competitors are two other underwear companies: Fruit of the Loom, which is owned by Berkshire Hathaway (BRK) and Jockey, which is still privately owned. Other competitors include the publicly traded Maidenform Brands and Warnaco Group.

References

  1. HBI 2009 10-K "Business" pg. 4
  2. HBI 2009 10-K "Our Brands" pg. 6-7
  3. HBI 2009 10-K "Customers" pg. 8-9
  4. 4.0 4.1 HBI 2009 10-K "Selected Financial Data" pg. 36
  5. HBI 2009 10-K "Our Segments" pg. 7-8
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