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Underwear Battle Heats Up

A turf war between Fruit of the Loom Inc. and Hanesbrands Inc.

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A turf war between Fruit of the Loom Inc. and Hanesbrands Inc. — the two largest makers of cotton underwear, T-shirts and casualwear for men, women and children — is expected to intensify over the next few months. FTL generates estimated annual wholesale revenues of $1.8 billion, and its parent is Berkshire Hathaway Inc., worth $98.53 billion. Hanesbrands, a $4.5-billion powerhouse with brands including Hanes, Playtex and Champion, was spun off into a separate public company from $15.94-billion Sara Lee Corp. in August 2006.

Apparently, Wall Street guru Warren Buffet, who heads Berkshire Hathaway, is enamored of anything related to the underwear or lingerie categories. His most recent acquisition in January was VF Corp.’s Global Intimate Apparel business for $350 million, by which he secured a portfolio of national brands in the U.S. including Vanity Fair, Vassarette, Lily of France, Bestform and Curvation, as well as Lou, Gemma and Belcor in Europe. In 2006, Berkshire purchased Russell Corp., a specialist in cotton T-shirts, activewear and casualwear, for $600 million, and in January 2002 plunked down $835 million to buy the FTL brand.

FTL introduced Fruit of the Loom underwear for women to the European market in February at the Salon International de la Lingerie in Paris, France, expanding the brand’s franchise overseas. Sources say Buffet is continuing to explore other acquisitions in the lingerie field.

Officials at FTL could not be reached. But following the sale of the Global Intimate Apparel business in January, Eric Wiseman, VF’s president and chief operating officer, said, “The intimate apparel business has not been performing at a historical level. We think with the right investment, it can return to its historic rate and performance levels and we think Fruit of the Loom can do that. I do know that Fruit of the Loom is committed to the intimate apparel business.”

Executives at Hanesbrands have kept mum about plans. However, at the time of the spin-off, Rich Noll, chief executive of Hanesbrands, told WWD that part of the company’s mission was “out-executing our competition…by leveraging our sustainable competitive advantage.” He added the company’s strategy for growth would be to maintain a “world-class consumer goods company.”

Sizing up the situation, one veteran executive who requested anonymity noted, “They are the two biggest players in the cotton underwear, T-shirt and casualwear business. Buffet is going after that business, and apparently he wants the biggest share.”

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