High hopes for Hanesbrands
30th October 2009 18:26

Inventory cutbacks by retailers determined not to be stuck with unwanted merchandise eating into gross margins this year have had a decimating impact on the brands and manufacturers who supply them.

But perhaps heeding concerns that merchandise levels at many of the hardest-pressed retailers are now perilously low, and that they need to be ready for the much-anticipated uptick in consumer demand, there are signs that some are re-stocking rather than risking missing out on desperately needed sales.

One supplier that is particularly optimistic about its potential next year is Hanesbrands, which says it has signed distribution deals that should result in 5%, or $200m of sales growth, in 2010.

Target, Walmart, Macy's, Kohl's, Dollar General and JC Penney have all committed to space gains for Hanesbrands’ men's underwear and intimate apparel lines like Bali, Playtex, Hanes and Barely There; while Walmart’s plans to expand the Just My Size brand could provide an extra $75.0m in casualwear sales in 2010, growing to $150.0m over time.

Hanesbrands says the growth is not dependent on an increase in consumer spending, but will come from gains in shelf-space allocation and distribution even if spending patterns continue at today’s recessionary levels.

And it believes the moves endorse its efforts in new-product innovation, such as underwear T-shirts with lay-flat collars, dyed underwear briefs, and briefs with ComfortSoft waistbands.

The company also made the point during a conference call that retailers are now looking for strong national brands with broad appeal to bring people in their stores, instead of a shift towards private label. And it says it has been helped by a strong desire on a lot of retailers' parts to drive moderate-price brands.

All of which seems to fly in the face of conventional wisdom which had retailers seeking out proprietary brands as a point of differentiation.

“Importantly though, retailers aren't looking at this as sort of a short-term reaction to the recession, they're really looking at it as a way to build their business long term,” said chairman and chief executive officer Richard A Noll.

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