QUOTE AND NEWS
newratings.com  Jul 24  Comment 
WASHINGTON (dpa-AFX) - Apparel maker Hanesbrands Inc. (HBI) on Thursday reported a 27 percent increase in profit for the second quarter from last year on higher sales reflecting the acquisition of Maidenform Brands that helped offset acquisition...
SeekingAlpha  Jul 24  Comment 
Hanesbrands Inc. (NYSE:HBI) Q2 2014 Earnings Conference Call July 23, 2014 16:30 ET Executives T.C. Robillard - Vice President, Investor Relations Rich Noll - Chief Executive Officer Gerald Evans - Chief Operating Officer Rick...
Wall Street Journal  Jul 23  Comment 
Hanesbrands inc.'s second-quarter earnings rose 27% as the apparel maker benefited from its Maidenform Brands acquisition and sales in its activewear segment.
newratings.com  Jul 23  Comment 
Market Intelligence Center  Jul 22  Comment 
MarketIntelligenceCenter.com’s patented algorithms have chosen the Oct. '14 $95.00 call for a couple of hedged-trading ideas on Hanesbrands (HBI). A traditional covered call on Hanesbrands yields 3.69% (15.30% annualized, for comparison purposes...
Motley Fool  Jul 6  Comment 
Why did investors flock to Hillshire Brands, Hanesbrands, and Skechers in the second quarter?
SeekingAlpha  Jun 27  Comment 
By The Value Investor: Shares of Hanesbrands (HBI) jumped to fresh all-time highs on Wednesday after the company acquired Europe-based DBApparel in what appears to be a hugely accretive deal. After years of stagnation this could be the second...
Motley Fool  Jun 26  Comment 
The stock market bounced today back from its declines yesterday, and these stocks helped lead the way higher. Find out more about what made them soar.
Motley Fool  Jun 25  Comment 
Is Hanesbrands' stock move meaningful? Or just another movement?
Benzinga  Jun 25  Comment 
Hanesbrands (NYSE: HBI) shares are shooting higher Wednesday after the company announced it would acquire DB Apparel. The market’s reaction indicates that investors expect massive synergies between Hanes and the top market shareholder in...
newratings.com  Jun 25  Comment 
WASHINGTON (dpa-AFX) - Apparel marketer HanesBrands Inc. (HBI) announced its intention to acquire DBApparel of France from Sun Capital Partners, Inc., if consultation with European and French works councils representing DBA employees is completed...




 

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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