Hanesbrands may not be the most exciting company in the world but it makes apparel that eveyone buys and it makes a lot of money doing it. Now I don't know about anyone else, but I like these kinds of companies that steadily make products that everyone needs and most people just routinely buy without a lot of thought about it. It's especially nice when it's a product that wears out and needs to be replaces on a regular basis. And that's why I like companies like Hanesbrands.
Hanesbrands Inc., a consumer goods company, designs, manufactures, sources, and sells various basic apparels for men, women, and children in the United States. The company operates through four segments: Innerwear, Activewear, Direct to Consumer, and International. It sells bras, panties, shapewears, hosiery, men's underwear, children's underwear, and socks; and other activewear, such as T-shirts, fleece, sport shirts, performance T-shirts and shorts, sports bras, and thermals, as well as licensed logo apparel in collegiate bookstores and other channels. The company licenses its Champion name for footwear and sports accessories. It provides its products primarily under the Maidenform, Bali, Playtex, Hanes, JMS/Just My Size, Lilyette, Wonderbra, Donna Karan, DKNY, Champion, Polo Ralph Lauren, L'eggs, Hanes Beefy-T, Gear for Sports, Duofold, DIM, Nur Die/Nur Der, Lovable, Shock Absorber, Abanderado, Zorba, Rinbros, Kendall, Sol y Oro, Fila, Bellinda, Edoo, and Track N Field brand names. The company markets its products through retailers, wholesalers, and third party embellishers, as well as directly to consumers. As of January 2, 2016, it operated 252 outlet stores in the United States; and Websites under the Hanes, One Hanes Place, JMS/Just My Size, Champion, and Maidenform names. The company also sells its products in Europe, Asia, Latin America, Canada, Australia, the Middle East, Africa, and the Caribbean. Hanesbrands Inc. was founded in 2005 and is headquartered in Winston-Salem, North Carolina.
(Summary) (Company) (Chart)
| 4 December 2016 Price $22.87 1yr Target $32.85 Analysts 13 Dividend $0.44 Payout Ratio 34.10% 1yr Cap Gain 43.63% Yield 1.92% 1yr Tot Return 45.55% P/E 17.67 PEG 1.51 Beta 0.96 | EPS (ttm) $1.29 EPS next yr $2.16 Forward P/E 10.57 EPS next 5yr 11.74% 1yr Price Support $25.35 Market Cap $8.79 Bil Revenues $5.86 Bil Earnings $500.40 Mil Profit Margin 8.53% Quick Ratio 0.80 Current Ratio 1.90 Debt/Equity 3.48 | 1yr RevGR 7.64% 3yr RevGR 8.10% 5yr RevGR 6.68% 1yr EarnGR 7.07% 3yr EarnGR 36.81% 5yr EarnGR 14.44% 1yr DivGR 10.00% 3yr DivGR 29.71% 5yr DivGR --- ROA 7.90% ROE 44.90% |
Company Overview
Hanesbrands Inc. is a manufacturer and marketer of leading everyday basic apparel under some of the world’s strongest apparel brands, including Hanes, Champion, Maidenform, DIM, Playtex, Bali, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable, Wonderbra, Flexees, Lilyette and Gear for Sports.
The company sells bras, panties, shapewear, hosiery, men’s underwear, children’s underwear, socks, T-shirts and other activewear in the Americas, Asia, Australia and Europe. In the United States, they sell more units of intimate apparel, male underwear and children’s underwear than any other company. Unlike most apparel companies, Hanesbrands primarily operates its own manufacturing facilities. More than 80 percent of the apparel units that they sell in the United States are manufactured in their own plants or those of dedicated contractors.
The company has a long history of innovation, product excellence and brand recognition. In fact, more than 80 percent of U.S. households have their products in them. The company revolutionized Tagless T-shirts and underwear, invented the sports bra, and were the first to advertise a bra on national television (Playtex). The company is now using their Innovate-to-Elevate strategy to integrate brand superiority, industry-leading innovation and a low-cost global supply chain to provide higher valued products while lowering production costs. The Tagless apparel platform, ComfortFlex Fit bra platform, ComfortBlend fabric platform and temperature-control X-Temp fabric platform incorporate big-idea innovation to span brands, product categories, business segments, retailer and distribution channels and geographies.
Founded in 1901, Hanesbrands was organized as a Maryland corporation in 2005 and spun off from Sara Lee Corporation in 2006, at which time they became an independent, publicly-traded corporation. Since then, they have used strategic acquisitions to expand the brand portfolio. In November 2010, the company expanded their activewear portfolio through the acquisition of GearCo, Inc., known as Gear for Sports, a leading seller of licensed logo apparel in collegiate bookstores and other channels. In October 2013, the company acquired Maidenform Brands Inc., a global intimate apparel company, including the brands Maidenform, Flexees and Lilyette. They acquired another portfolio of strong brands including DIM, Nur Die/Nur Der, Lovable, Shock Absorber and Abanderado through the August 2014 acquisition of DBA Lux Holding S.A. (“Hanes Europe Innerwear”), a leading marketer of intimate apparel, hosiery and underwear in Europe. Most recently, in April 2015, they acquired Knights Holdco, Inc. (“Knights Apparel”), a leading seller of licensed collegiate logo apparel primarily in the mass retail channel. The company believes these acquisitions will create growth and cost savings opportunities and increased scale to serve retailers.
The Brands
The company's portfolio of leading brands is designed to address the needs and wants of various consumer segments across a broad range of basic apparel products. Their brands hold either the number one or number two U.S. market position by units sold in most product categories in which they compete. Each of the brands has a unique consumer positioning that distinguishes it from its competitors and guides its advertising and product development.
Hanes is the largest and most widely recognized brand in the portfolio. Hanes is the number one brand of total apparel in the U.S. and is found in eight out of 10 U.S. households. The Hanes brand covers all of the product categories, including men’s, women’s and children’s underwear, bras, socks, T-shirts, fleece, shapewear and sheer hosiery. Hanes stands for outstanding comfort, style and value.
Champion is the company's second-largest brand. For nearly 100 years, Champion has been outfitting athletes in authentic, high-quality athletic apparel, including high-performance sports bras, team uniforms and gym essentials like classic T-shirts, mesh shorts and fleece hoodies. An industry leader in quality, design and performance innovation, Champion provides athletes with mobility, durability and up-to-date styles - in and out of the gym, on and off the field. Champion has also collaborated on premium apparel items through an exclusive collection with Todd Snyder, a limited edition men’s apparel line for Urban Outfitters and custom specialty items for Supreme. In addition, the company distributes a full line of men’s, women’s and children’s C9 by Champion products exclusively through Target Corporation stores.
The brand portfolio also includes a number of iconic intimate apparel brands: Bali offers a range of bras, panties and shapewear sold in the department store channel and is the number one bra brand in department stores. Playtex is America’s number one plus-size bra brand. Playtex offers superior fit and support for women of all sizes and is sold everywhere from mass merchandise retailers to department stores. DIM is a flagship European brand and a market leader in women’s underwear, hosiery and intimate apparel in France. Maidenform is the number one shapewear brand in America and has been trusted for modern, sensual style in bras, panties and shapewear since 1922.
In addition, the company offers a variety of products under the following well-known brands: JMS/Just My Size, Nur Die/Nur Der, L’eggs, Wonderbra, Gear for Sports, Lilyette and Loveable.
The company's portfolio of leading brands is designed to address the needs and wants of various consumer segments across a broad range of basic apparel products. Their brands hold either the number one or number two U.S. market position by units sold in most product categories in which they compete. Each of the brands has a unique consumer positioning that distinguishes it from its competitors and guides its advertising and product development.
Hanes is the largest and most widely recognized brand in the portfolio. Hanes is the number one brand of total apparel in the U.S. and is found in eight out of 10 U.S. households. The Hanes brand covers all of the product categories, including men’s, women’s and children’s underwear, bras, socks, T-shirts, fleece, shapewear and sheer hosiery. Hanes stands for outstanding comfort, style and value.
Champion is the company's second-largest brand. For nearly 100 years, Champion has been outfitting athletes in authentic, high-quality athletic apparel, including high-performance sports bras, team uniforms and gym essentials like classic T-shirts, mesh shorts and fleece hoodies. An industry leader in quality, design and performance innovation, Champion provides athletes with mobility, durability and up-to-date styles - in and out of the gym, on and off the field. Champion has also collaborated on premium apparel items through an exclusive collection with Todd Snyder, a limited edition men’s apparel line for Urban Outfitters and custom specialty items for Supreme. In addition, the company distributes a full line of men’s, women’s and children’s C9 by Champion products exclusively through Target Corporation stores.
The brand portfolio also includes a number of iconic intimate apparel brands: Bali offers a range of bras, panties and shapewear sold in the department store channel and is the number one bra brand in department stores. Playtex is America’s number one plus-size bra brand. Playtex offers superior fit and support for women of all sizes and is sold everywhere from mass merchandise retailers to department stores. DIM is a flagship European brand and a market leader in women’s underwear, hosiery and intimate apparel in France. Maidenform is the number one shapewear brand in America and has been trusted for modern, sensual style in bras, panties and shapewear since 1922.
In addition, the company offers a variety of products under the following well-known brands: JMS/Just My Size, Nur Die/Nur Der, L’eggs, Wonderbra, Gear for Sports, Lilyette and Loveable.
Our Segments
Hanesbrand's operations are managed and reported in four operating segments, each of which is a reportable segment for financial reporting purposes: Innerwear, Activewear, Direct to Consumer and International. These segments are organized principally by product category, geographic location or distribution channel. Each segment has its own management that is responsible for the operations of the segment’s businesses, but the segments share a common supply chain and media and marketing platforms.
Innerwear. The Innerwear segment focuses on core apparel products, such as intimate apparel, men’s underwear, panties, children’s underwear, socks and hosiery marketed under well-known brands that are trusted by consumers. Hanesbrands is the intimate apparel category leader in the United States with our Hanes, Maidenform, Bali, Playtex, JMS/Just My Size, L’eggs, Wonderbra, Lilyette, Donna Karan and DKNY brands, and they are also the leading manufacturer and marketer of men’s underwear and children’s underwear in the United States under the Hanes, Champion and Polo Ralph Lauren brands and women’s sheer hosiery under the L’eggs, Hanes, Maidenform, JMS/Just My Size, Donna Karan and DKNY brands. During 2015, net sales from our Innerwear segment were $2.6 billion, representing approximately 46% of total net sales.
Activewear. Hanesbrands is a leader in the activewear market through their Champion, Hanes, JMS/Just My Size and Duofold brands, where they sell products such as T-shirts and fleece to both retailers and wholesalers. In addition to activewear for men and women, Champion provides uniforms for athletic programs and includes an apparel program, C9 by Champion, at Target stores. They also license their Champion name for footwear and sports accessories. In the branded printwear category, the compan supplies their T-shirts, sport shirts and fleece products, including brands such as Hanes, Champion and Hanes Beefy-T, to customers, primarily wholesalers, who then resell to screen printers and embellishers. They also sell licensed logo apparel in the mass retail channel and in collegiate bookstores and other channels under our Gear for Sports and Champion brands. They also sell licensed collegiate logo apparel primarily in the mass retail channel under our Knights Apparel brand. They also offer a range of quality, comfortable clothing for men, women and children marketed under the Hanes and JMS/Just My Size brands. The JMS/Just My Size brand offers casual apparel designed exclusively to meet the needs of plus-size women. During 2015, net sales from our Activewear segment were $1.6 billion, representing approximately 27% of total net sales.
Direct to Consumer. Their Direct to Consumer operations include the domestic Company-operated outlet stores and website operations that sell branded products directly to consumers in the United States. As of January 2, 2016, the compan had 252 outlet stores in the United States and operated websites under the Hanes, One Hanes Place, JMS/Just My Size, Champion and Maidenform names. During 2015, net sales from the Direct to Consumer segment were $388 million, representing approximately 7% of total net sales.
International. The International segment includes products that span across the Innerwear and Activewear reportable segments and are primarily marketed under the DIM, Playtex, Hanes, Champion, Nur Die/Nur Der, Loveable, Wonderbra, Maidenform, Shock Absorber, Abanderado, Zorba, Rinbros, Kendall, Sol y Oro, Lilyette, Polo Ralph Lauren, Fila, Bellinda, Edoo, Track N Field, Ritmo, Donna Karan and DKNY brands. The Innerwear brands are market leaders across Western and Central Europe. In the intimate apparel category, they hold the number one market share in France and Spain and the number two market share in Italy. The company is also the category leader in men’s underwear in France and Spain, and in hosiery in France and Germany. During 2015, net sales from their International segment were $1.1 billion, representing approximately 20% of total net sales and included sales in Europe, Asia, Latin America, Canada, Australia, the Middle East, Africa and the Caribbean. Their largest international markets are Europe, Japan, Canada, Mexico, Brazil and Australia.
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The Path Forward
This is an easy decision for me. I like these kinds of companies that simply excel at what they do. I intend to start a position in this company this week simply because the stock has significantly pulled back to the point where it's very reasonable compared to its fundamentals. If there's anything that bothers me it's the debt level on these shares, but as long as the company continues to improve its revenues and earnings, I believe the company will work off the debt over the next few years.
I expect these shares to produce a significant total return over the short term and a very nice total return in the years ahead. As always, I intend to start with a small position and then allow dividend reinvestment, the sale of call options and open market buys to increase this postion over time.
This is an easy decision for me. I like these kinds of companies that simply excel at what they do. I intend to start a position in this company this week simply because the stock has significantly pulled back to the point where it's very reasonable compared to its fundamentals. If there's anything that bothers me it's the debt level on these shares, but as long as the company continues to improve its revenues and earnings, I believe the company will work off the debt over the next few years.
I expect these shares to produce a significant total return over the short term and a very nice total return in the years ahead. As always, I intend to start with a small position and then allow dividend reinvestment, the sale of call options and open market buys to increase this postion over time.
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