HanesBrands, one of the world’s largest underwear and activewear apparel manufacturers, has announced preliminary third-quarter results it says are in line with company guidance amid the news it has acquired privately held Alternative Apparel, a marketer of better apparel basics, for US$60m.
In a trading update published yesterday (18 October), Hanes said it expects to achieve third-quarter net sales of about US$1.8bn, EPS of about $0.55, and adjusted EPS of about $0.60, consistent with company guidance.
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The North Carolina-based company added it expects year-to-date net cash from operations of around $330m.
“We met our goal of returning to organic growth, and we continued to generate strong operating cash flow,” said CEO Gerald Evans Jr. “Our sales and EPS results, driven by stronger-than-expected international growth, are expected to be consistent with our guidance.”
Meanwhile, Hanes revealed it has purchased Georgia-based Alternative Apparel in an all-cash transaction valued at around $60m under the Alternative brand to the distributor, online, direct-to-consumer and traditional retail channels.
Founded in 1995, Alternative Apparel is a lifestyle brand known for its comfort, style and social responsibility. It outsources production of all of its products, which include Alternative brand better basic T-shirts, fleece and other tops and bottoms.
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By GlobalDataThe company’s sales and growth are split between the embellishment channel and the retail, online and direct-to-consumer channels. It is expected to have full-year 2017 net sales of about $70m and operates three Alternative stores – in Venice, California; SoHo, New York; and San Francisco.
For Evans, the company presents an “attractive” business model which further diversifies Hanes’ sales mix.
“This is an exciting acquisition that supports our activewear growth strategy,” he adds. “We will be able to leverage our global low-cost supply chain, which is a recognised social, environmental and ethical leader, with another strong brand to expand our market and channel penetration, including online. Combining these two companies is a great way to create value and generate growth opportunities.”
FBR & Co analyst Susan Anderson, notes: “While the acquisition is relatively small compared to our full-year revenue estimate of $6.5bn, we believe the acquisition could complement the success HanesBrands has been seeing with the Champion brand and allow for greater online opportunities.”
Hanes will update its full-year guidance and release full third-quarter results after the market closes on 1 November.
