Hanesbrands Buys Alternative Apparel in $60 Million Cash Deal
The basics company is looking to Alternative for a product infusion and online growth.
Hanesbrands Inc. paid $60 million to add comfort basics brand Alternative Apparelto its group.
Hanes acquired Alternative in a cash deal using cash on hand and short-term borrowings from a revolving credit facility. Hanes’ chief executive officer Gerald Evans said the addition “supports our activewear growth strategy.”
“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,” Evans said. Combining these two companies is a great way to create value and generate growth opportunities.”
Evans added that Alternative’s business model is “attractive” and that the brand will “further diversify our sales mix as we emphasize growth across all channels.”
Hanes also noted full-year sales for Alternative are expected to total $70 million.
Alternative’s ceo, Evan Toporek, will stay on in the role and remain in the company’s headquarters of Norcross, Ga. He said the deal will allow Alternative to be available “on a grander scale.”
It’s unclear what changes will be made to Alternative, which outsources all of its production, while Hanes manufactures most of its own activewear. Alternative also markets itself as a sustainable and eco-minded manufacturer, and says more than 80 percent of its garments are made with “sustainable materials and processes.”
Alternative operates three branded retail stores in Venice, Calif., the SoHo neighborhood of New York and San Francisco. It’s sales are split between it’s own and third-party retail, online and an embellishment business.
Hanes also said it expects third-quarter net sales to total $1.8 billion, equaling earnings per share of 55 cents. Income from operations should come in at $330 million, which the company said was in line with its guidance.
Third quarter results will be released Nov. 1.
In May, Hanes said sales were on the rise, but it decided to implement a cost-cutting initiative nonetheless. A new multiyear initiative referred to as “Project Booster” is expected to generate about $300 million in operational cash and $100 million in net savings annually by 2020.
The move included the elimination of its direct-to-consumer segment, which consisted of outlet stores, its legacy catalogue business and retail Internet operations in the U.S. The related elimination of 220 corporate employee positions cost about $7 million.
The project also calls for a $50 million reinvestment aimed at yearly growth, mainly focused on the company’s Champion activewear business, as well as going omnichannel worldwide.