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Hanesbrands : company profile

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Hanesbrands is North America's leading manufacturer of branded underwear, t-shirts and intimates, with a substantial portfolio of brands including Hanes, Champion, Playtex and L'Eggs. It added US rival Maidenform in 2013 for $575m. The business was formed in 2006 from the spin-off to shareholders of the branded apparel division of what was then Sara Lee Corporation. It remains one of the world's biggest branded clothing companies, producing a huge variety of men's, women's and children's intimates, underwear, sportswear and legwear. In its main market of the US, it is the overall #1 in men's and children's underwear and in hosiery, and the #2 in women's underwear. In 2014 it re-established a presence in Europe, buying back lingerie brand Dim and local rights to the Wonderbra and Playtex brands, which had been spun off separately by Sara Lee in 2006. More recently it expanded into Australasia with the bolt-on of local underwear icon Bonds.

Advertising

Who handles advertising? Click here for agency account assignments from adbrands.net. Hanesbrands declared advertising expense of $169m for 2016.

Competitors

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Brands & Activities

Hanesbrands divides its operations into what it calls "innerwear", in other words general underwear, and "activewear" such as t-shirts, fleeces and sportswear. Traditionally a collection of separately managed brands, these are now integrated under a single design, sales and marketing team to increase cross-brand efficiency. Hanes is the group's single biggest brand, with retail sales of around $3.6bn in 2013 (NPD research). It is the overall largest-selling single apparel brand in US by unit volumes, encompassing an extensive range of men's, women's and children's outerwear, underwear and hosiery products. It generally also features at the top of annual surveys as the best-known apparel or accessory brands among US women. It was the #1 for five consecutive years on the Women's Wear Daily Top 100 Brands Survey of apparel and accessory brands that women know best from 2004 to 2008, and #2 when that ranking was reintroduced in 2012.

In 2002, Hanes was the first manufacturer to introduce "tagless" t-shirts, with the label printed directly onto the inside of the shirt to avoid an itchy tag, a concept widely copied by other companies. Other innovations have included bras with no-slip straps and, from 2008, no-ride-up "wedgie-free" panties, which became the subject of a high-profile TV advertising campaign featuring comic actress Sarah Chalke. More recent innovations include X-Temp and 3D Flex "breathable" fabric, and FreshIQ odor protection for socks and underwear. Other brand ambassadors include Michael Jordan, Jennifer Love Hewitt and Cuba Gooding Jr. The brand also operates a number of key marketing partnerships, not least as the exclusive supplier of apparel, including printed t-shirts, at all Disney's US theme parks and resorts.

Hanes is supported in the group portfolio by several other brands. The biggest of these is Champion sports performance apparel, sales of which have grown steadily in recent years, hitting an estimated $2.0bn at retail. It includes the C9 by Champion sub-brand, sold exclusively through Target. In 2010 Hanes acquired Gear For Sports, which markets branded sportswear to college and military stores for $225m. That business was expanded further in 2015 with the purchase of Knights Apparel, which produces a wide range of collegiate t-shirts, sweatshirts and other items for sale through mass-market retailers. However a collection of outerwear operations in Europe were sold in 2012. Hanes reacquired the Champion brand in the EMEA region in 2016 (for around $220m) as well as regional rights for Japan.

The group's women-specific intimates brands include legendary bra manufacturer Playtex. That brand revolutionised the US lingerie market in its heyday. It was the first bra ever advertised on television in the 1960s with the original "Cross Your Heart" bra, and broke new ground in 1970 with the 18 Hour bra. It is still one of the most widely-known names in women's intimates, worth around $310m annually in US retail sales. It is partnered by the Bali bras and panties range, with retail sales of around $450m. Other brands or sub-brands in the women's portfolio include top-selling hosiery range L'eggs, Just My Size plus-sized underwear, Barely There intimates and Wonderbra. Hanes produces men's underwear under license for for Ralph Lauren. In July 2013, the group agreed to acquire rival Maidenform for $575m. The latter sells bras, "shapewear" and panties under such brands as Maidenform, Flexees, Lilyette, Self Expressions and Sweet Nothings, as well as Polo Ralph Lauren, Donna Karan and DKNY under license. Annual sales are around $560m.

The European branded apparel division previously owned by Sara Lee, which housed brands such as Dim, Elbeo and Nur Die, as well as local rights to Playtex and Wonderbra, was sold separately in 2005 to a subsidiary of private investment firm Sun Capital, and relaunched as DB Apparel. In June 2014, Hanesbrands announced a deal to reacquire the business for €400m. The acquisition closed in October the same year. The key benefit to Hanes is a wider global footprint - previously only around 11% of revenues came from outside the US - as well as global ownership of the Wonderbra and Playtex brands, which it already controlled in the US and Asia.

Courtaulds, a separate UK-based division that had been part of Sara Lee and manufactures private-label clothing for retailers as well as the Pretty Polly, Gossard, Berlei and Aristoc brands, was sold in 2006 to a group led by garment manufacturer PD Enterprise.

In April 2016, Hanes unveiled a deal to acquire its Australian counterpart Pacific Brands for around $800m. The target company currently manages a variety of different businesses, but is best-known for underwear. Its Bonds brand is something of an Australian icon, as much of a household name down under as Hanes is in the US. Pacific also has local ownership of the Berlei lingerie brand (another Australian icon), and produces premium-priced bedsheets, linen and towels under the Sheridan banner. Two other businesses of Dunlop-branded flooring and Tontines pillows were divested. The acquisition closed in July 2016. The group expanded its Australian operations in 2018 with the purchase of specialist online and traditional retailer Bras N Things for $400m.

Financials

Hanesbrands reported record revenues of $6.47bn for 2017, up 7% as a result of the addition of Bonds. The organic increase excluding acquisitions was 2%. An exceptional one-off tax adjustment reduced net income to $6.19m, down from $539m the year before. Excluding that item, income from continuing operations dipped by just 6%.

Innerwear, which covers underwear, intimates and socks, accounted for revenues of $2.46bn, down 3% on the year before; activewear, including t-shirts, fleeces and sporting apparel, rose 3% to $1.65bn. The group generated an additional $300m from other areas including discounted outlet sales and hosiery. However the biggest growth has been in international. As a result of acquisitions, sales almost tripled between 2014 and 2017 to $2.05bn.

The US accounted for 74% of sales in 2016, or almost $4.5bn. Hanes sells through an extensive collection of mass market and department store retailers. Wal-Mart alone accounts for 20% of total sales (and over a third of innerwear sales). Target accounts for a further 15% of total sales (and 28% of activewear). The group also operates a small network of around 250 of its own branded outlets. The next biggest market after the US is now Australia ($278m in 2016, but likely to reach $500m in 2017), followed by France ($291m in 2016), Japan ($182m) and Italy ($174m).

Background

Brothers J Wesley Hanes and Pleasant H Hanes established separate companies in Winston-Salem, North Carolina in the opening years of the 20th century to manufacture men's hosiery and underwear, and had expanded into women's undergarments, nightshirts and shorts by the 1920s. Despite the family connection and similar lines of business, the two companies remained entirely separate for more than 60 years, until finally merging in 1965 as Hanes Corporation. Bali was acquired in 1971; a year later the group introduced L'eggs tights, which proved enormously successful and were spun off as a separate company.

In 1979 Hanes was acquired by Consolidated Foods, later to become Sara Lee, and a number of sub-brands were introduced during the course of the decade including Hanes My Size and Hanes her Way. Champion sportswear was acquired in 1989, followed by Playtex underwear in 1991. The Wonderbra design was originally introduced in the UK by Courtaulds, then a group subsidiary, in the early 1990s, and was introduced in the US in 1994 to considerable acclaim, followed by Barely There seamless underwear a year later. As a result of a structural repositioning, Sara Lee began plans to spin off all of its branded apparel subsidiaries in 2005. That process was completed in September 2006.

Last full revision 8th March 2017

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