The $4.61 billion innerwear and sportswear powerhouse plans to bolster its branded Hanes and Champion businesses in the U.S. while shifting its focus away from a mature European market to emerging hot spots in Asia and the Americas.
The strategy, which is part of Hanes’ restructuring plan, was underscored Wednesday with two major changes: The company is divesting its Outer Banks brand and eliminating its private label business in the U.S., and is selling the European screen print division, which accounts for 8 percent of the company’s sales, to an affiliate of Netherlands-based Smartwares BV for 15 million euros, or about $20 million. The sale is expected to close this week.
To reflect the new strategic direction, Hanes will change the name of its imagewear operations to branded printwear, which will be focused on the Hanes and Champion megabrands in the U.S. with improved operating margins. Annual sales are expected to be about $150 million in 2013.
The company has informed its U.S. wholesale screen-print channel customers of the decision to discontinue private label production and exit the Outer Banks business. Hanes will work with retailers on transition plans.
Richard A. Noll, chairman and chief executive officer, said the company is narrowing the focus of its worldwide imagewear business to exit noncore segments and reduce risk.
“We are a branded company. That includes being committed to branded printwear in the United States, where we can partner with our wholesale customers to take advantage of our strong consumer brands and product differentiation,” said Noll. “With our exit from Europe, we can devote all of our energies to growing our branded portfolio in core geographies in the Americas and Asia.”
Further details from Noll were not available Wednesday.
Matt Hall, vice president of corporate communications, acknowledged that the European market was volatile, competitive and unpredictable.
“When the company was spun off [from Sara Lee Corp. in September 2006], we indicated that we are a company that’s focused on Asia, North America and South America. Our key markets are Canada, the U.S., Mexico, Brazil, Argentina and Asia, where we’ve had a presence in Japan for 30 years and are just getting started in China,” said Hall. “We did a review of the screen-print business in the U.S. and Europe.…It’s our only business in Europe, but with the volatility of the European market, we decided the most appropriate course was to exit the European business.”
The screen-print business, which is primarily T-shirts, is sold mainly at mass merchants. But that segment is highly competitive and has been impacted by the euro zone’s financial woes and sporadic tourist trade.
“The screen-print industry definitely has been susceptible to the [euro] economy and that also pulls back on tourism.…You’ll see the screen-print business as definitely susceptible to the tourist market,” said Hall. “At one time, Sara Lee did have a European apparel division, but that was sold off before Hanesbrands, and there’s plenty of competition out there.”
Hanesbrands expects to incur pretax charges in the second quarter of up to $85 million to $95 million for the write-off of intangibles, the loss on the sale of the European business, inventory markdowns and other related items to the imagewear actions. Hanes is reconfirming its previous 2012 guidance of $2.50 to $2.60 for diluted earnings per share and free cash flow in the range of $400 million to $500 million.
Last month, the company posted a loss of $26.8 million, or 27 cents a share, for the first quarter and sales fell 2.7 percent to $1.01 billion.
Higher cotton costs helped drag Hanesbrands into the red for the first quarter, but the company beat analysts’ estimates and said the worst had passed.
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)
@heriethpaul and @gracebol have a moment on the @victoriassecret fashion show 2017. See every look from the runway on WWD.com. Link in bio. (📷: @giovanni_giannoni_photo) #wwdfashion #victoriassecret #VSFashionShow
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia