Promogram

HanesBrands Acquires Alternative Apparel, Announces Preliminary Q3 Results

North Carolina-based HanesBrands (asi/59528) announced Wednesday that it has acquired supplier Alternative Apparel (asi/34850) in an all-cash transaction valued at approximately $60 million on an enterprise basis. HanesBrands also revealed preliminary third quarter results, reporting net sales of $1.8 billion, earnings per share of about $0.55, and adjusted earnings per share of approximately $0.60. 

According to HanesBrands, the acquisition of Alternative Apparel closed Friday. Georgia-based Alternative Apparel, which specializes in fashionable basics like T-shirts and fleece, is expected to have full-year 2017 net sales of about $70 million. 

“This is an exciting acquisition that supports our activewear growth strategy,” said Hanes Chief Executive Officer Gerald W. Evans Jr. “We will be able to leverage our global low-cost supply chain, which is a recognized 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.”

Counselor contacted HanesBrands to ask what type of business model the apparel maker would pursue with Alternative Apparel. Will Hanes make the supplier’s line available to the promotional products industry through the network of supplier partners it currently works with in the niche, or is there another option being considered?

Rachel Newman, director of sales and marketing for Hanes Activewear, told Counselor that more information will be shared in the weeks to come, adding: “We are excited to expand our brand portfolio in the embellishment market. Alternative Apparel created a new high-end threshold in this channel. Along with Hanes and Champion, Alternative gives us an incredible range of apparel that meets the needs of customers at every level across the industry. Importantly, Alternative’s commitment to social responsibility fits firmly within the Hanes ethos. This is a great opportunity to expand our commitment and footprint in the branded printwear industry.” 

Under the deal announced this week, Alternative Apparel CEO Evan Toporek will remain with Hanes to continue leading the business out of Norcross, GA. “We’re thrilled to share Alternative products and experiences on a grander scale by leveraging Hanes’ global supply chain and growth platform,” Toporek said. “Partnering with a like-minded company that is a longtime industry innovator and leader will benefit our employees, our customers and our brand as a whole.” 

HanesBrands now plans to announce full-quarter results on Wednesday, November 1. Those results are expected to include information that shows year-to-date net cash from operations of approximately $330 million. The $1.8 billion in preliminarily reported third-quarter net sales would be an improvement over this year’s second quarter performance. For the second quarter ended July 1, 2017, net sales were $1.65 billion – a 12% increase over the prior year’s Q2.

“We met our goal of returning to organic growth, and we continued to generate strong operating cash flow,” Evans said of the third quarter performance. “Our sales and EPS results, driven by stronger-than-expected international growth, are expected to be consistent with our guidance.”

In the past six years, Hanes has expanded its Champion and Hanes activewear graphic and sports apparel business through the acquisitions of Gear for Sports, a seller of licensed logo apparel in the collegiate bookstore channel; Knights Apparel, a seller of licensed logo apparel in the mass retail channel; and GTM Sportswear, a seller of custom-decorated high school teamwear and fanwear.