Hanesbrands can't wait 'til it gets its Hanes on you. The company designs, makes, and sells bras, hosiery, men's boxers, socks, and other intimate apparel under brand names such as Bali, Champion, barely there, Just My Size, Hanes, L'eggs, Playtex, and Wonderbra. Its bras are tops in the US and its underwear, legwear, and activewear units are market leaders as well. Hanesbrands also makes basic outerwear, such as T-shirts, and licensed logo apparel for collegiate bookstores, legwear for Donna Karan, and underwear for Polo Ralph Lauren. The lineup is sold to wholesalers, major retail chains (Wal-Mart, Target, and Kohls), and through Hanesbrands' value outlets and Internet site.
Hanesbrands divides its operations into four segments including innerwear (intimate apparel, men's and children's underwear, and socks), activewear, direct to consumer, and international. Innerwear is the largest by far, accounting for more than 50% of revenue in 2015, while Activewear generated more than 25%.
The company operates nearly 40 distribution centers, with 16 in the US and 21 located internationally near manufacturing regions.
Hanesbrands sells in roughly 35 countries, and rings up roughly 80% of its sales in the US (during 2015). Its largest international markets include Europe (12% of sales), Canada, Japan, Mexico, Brazil, and China.
Sales and Marketing
Wal-Mart, Target, and Kohls are the company's largest customers, accounting for 23%, 15%, and 5% of 2015 sales, respectively. Mass merchandise stores are vital to the company's performance, accounting for about half of Hanesbrands' total sales. Hanesbrands also allies with mid-tier stores, including J. C. Penney, Macy's, and Kohls, which are adding its lower-priced labels. It's L'eggs and Hanes brand underwear are also sold in food, drug, and variety stores. Hanesbrands also sell apparel to the US military for sale to soldiers and through discount chains, including Dollar General and Family Dollar Stores.
Hanesbrands' annual sales and profits have been growing over the past few years as new brand acquisitions have spurred more sales in more geographic markets.
The company's sales rose nearly 8% to $5.73 billion during fiscal 2016 (ended January 2016), mostly thanks to 40%-plus International segment growth. The International segment's Europe operation was boosted by its late 2014 acquisition of DBApparel. Its Activewear sales also grew as its Knights Apparel acquisition led to higher sports apparel sales.
Sales growth in FY2016 drove Hanesbrands' net income up 6% to $428.2 million, despite higher selling, general, and administration costs associated with acquisition and integration charges. The apparel maker's operating cash levels plunged 55% to $227 million for the year as it used more cash to build its inventory levels, paid $100 million in pension contributions, and decreased its accounts receivables collections due to the timing of sales in the fourth quarter.
Hanesbrands has been expanding its business overseas by acquiring top brands in its less-tapped markets. In 2016, for example, the company expanded in Australia after buying top intimates maker Pacific Brands in Australia. Pacific Brands adds to the 2014 acquisition of DBApparel Group of France, licensed to sell the Wonderbra and Playdex trademarks in the EU and South Africa.
The company also hopes to identify and capitalize on the long-term megatrends related to their top product lines over the next five to 10 years. To this end, in early 2015, the company purchased Knights Apparel to expand its sports licensed collegiate apparel business with a goal of appealing to college students as that market grows over the next years and decades.
Beyond growth, Hanesbrands has been reducing production costs by improving operating efficiencies in using a low-cost global supply chain based upon a combination of owned, contracted, and sourced manufacturing.
Mergers and Acquisitions
In 2016 the company acquired leading Australian undergarment company Pacific Brands Limited in a cash deal valued at $800 million. The acquisition gave Hanesbrands the top market position in Australia for intimate apparel. In addition to its core products, Pacific Brands Limited also operates pillow business Tontine and flooring business Dunlop. Hanesbrands intends to divest both businesses.
Hanesbrands also acquired Champion Europe, which owned the Champion brand in Europe, Middle East, and Africa, in 2016 for $228 million in cash. The company operates Champion Europe as a division of Hanes' global Champion organization.
In 2015, the company bought Knights Apparel, a leading retailer of licensed collegiate logo apparel, to enrich its own Gear for Sports licensed collegiate apparel business.