Recently, ABG, the parent company of Reebok, acquired the globally renowned footwear and apparel brand Champion from Hanesbrands for just above 1 billion US dollars (about 7.2 billion yuan).
Insiders warn that this move could result in the unemployment of thousands of employees worldwide, as the intellectual property management company plans to outsource most of the manufacturing, design, logistics, and operations of the brand to other companies.
ABG tends to outsource the production, design, logistics, and operations of its brands to third parties, while HanesBrands handles most of its production and operations internally. According to a report by HanesBrands, as of December 31, 2023, the company had 48,000 employees in 29 countries, with 88% located outside the United States, mainly in Central America, Asia, and the Caribbean. This acquisition could lead to the unemployment of thousands of employees.
Media reports indicate that a formal agreement has not yet been signed, but there are reports suggesting that the agreement may be formalized in writing next week. The transaction is expected to be completed by the end of May or early Jun. Prior to this, ABG has already acquired several other footwear and apparel brands, including Forever 21, Brooks Brothers, and Ted Baker.
This could be a disaster for Hanesbrands, as they are selling off one of their most famous brands, Champion. Without the Champion brand, the future of Hanesbrands appears even bleaker, especially considering Champion accounts for over 10% of Hanesbrands' market value. The loss of Champion's sales could severely impact the future operations of Hanesbrands. Insiders suggest that Delta Galil, Sycamore Partners, G-III Apparel, and WHP Global are also interested in the brand.
Champion's parent company, HanesBrands, is a professional manufacturer and distributor of underwear and sportswear in the United States. Its flagship brands include Hanes and Champion, as well as other underwear brands such as Playtex, Wonderbra, Bonds, DIM, and Bali. It is the largest underwear manufacturer in the United States and the world's largest textile producer.
In September 2023, Hanesbrands announced the strategic evaluation of Champion's global business. The board of directors will consider various alternatives to maximize shareholder value, including potential sales or other strategic transactions.
The sale of Champion is directly related to HanesBrands' declining performance over the past two years, with its stock price plummeting and debt levels remaining high. In May 2021, HanesBrands' stock price fluctuated around $20, which has fallen to around $4-5. In 2023, Hanesbrands repaid $500 million in debt and plans to repay over $300 million more this year.
On February 22, HanesBrands Group announced its fiscal year 2023 performance ending December 30, 2023, with net sales of $5.637 billion, down 9.6% year-on-year, with Champion accounting for about a third of the sales, The group's net loss was $17.726 million, compared to a net loss of $127.2 million in the same period last year.
From the second quarter of 2022 to the end of 2023, Champion's global sales have declined for seven consecutive quarters. According to fixed exchange rates, the sales decline of Champion globally in the four quarters of 2023 was 15%, 15%, 20%, and 24% respectively. Its sales decline in the US market was the most significant, but performance in other regions outside the US was also poor.
Champion used to be the "mainstay" of HanesBrands' revenue. According to public reports, Champion achieved sales of over $2 billion in 2019, contributing 30% of the revenue for HanesBrands that year.
However, in recent years, HanesBrands' financial crisis has become apparent. According to the company's 2023 annual report, as of the end of 2023, HanesBrands' net debt was $3.1 billion, with a debt-to-assets ratio as high as 92.57%.
In order to "rescue" itself, in addition to selling Champion, there have been large-scale cost-cutting measures, including but not limited to layoffs. In fact, in August of last year, HanesBrands had already laid off at least 250 corporate positions in the United States.
