Hanesbrands Inc. said Thursday that it will exit the yarn business by selling three of its plants and closing a fourth.
The Winston-Salem, N.C.-based basics maker said it will stop production immediately at its yarn facility in Sanford, N.C., which has 150 employees. In addition, by yearend Hanesbrands will close two warehouses in North Carolina that have a total of 25 employees.
Gastonia, N.C.-based yarn manufacturer Parkdale will take over Hanesbrands’ yarn plants in Rabun Gap, Ga., Mountain City, Tenn., and Galax, Va. Those facilities have a combined head count of 780 employees, the company said.
Hanesbrands declined to disclose the sale price. The firm said it will use Parkdale as a yarn supplier after the deal is completed.
“Producing our own yarn, when more than adequate large-scale supplies exist, serves no strategic purpose,” said Richard Noll, Hanesbrands chairman and chief executive officer. “Outsourcing yarn is a logical evolutionary step to drive value and improve the use of our assets.”
The company said it expects to realize $100 million in balance sheet benefits within six months of the sale due to working capital improvement and reductions in raw material requirements and inventory. It anticipates the sale to close in the fourth quarter of its fiscal 2009.