Champion Bids Roll In: Hanesbrands Said to Be Seeking $1.4B

Evan Clark
·2 min read

The bids are in and the Champion sale process is closer to finding its winner.

Hanesbrands Inc. hired Goldman Sachs & Co. and Evercore last year to explore “strategic options” for the active brand, leading to an auction that set the deadline on first-round bids for Wednesday, WWD previously reported.

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A source close to the situation said the auction produced multiple bids that are being evaluated.

Goldman Sachs declined to comment and neither Hanesbrands nor Evercore immediately returned WWD queries on Thursday.

The deal is a big one for Hanesbrands, which is said to have set $1.4 billion as a starting point for the auction — a sum that approaches Hanesbrands’ entire market capitalization of $1.6 billion.

Although it could not be learned just who submitted bids, a range of would-be buyers have shown interest in the process, including the brand-management giant Authentic Brands Group as well as the strategic player G-III Apparel Group.

A sale of Champion would give Hanesbrands’ finances a much needed boost. The company ended last year with net debt of $3.1 billion, or 5.2 times its adjusted earnings before interest, taxes, depreciation and amortization.

While Hanesbrands ended the year with liquidity of more than $1.3 billion, paying down debt is a priority. The company lightened its balance sheet last year by paying down $500 million in debt and plans to pay down more than $300 million this year.

Hanesbrands has been working to reset the Champion business by shifting its mix and showing more discipline on product and channel segmentation, but the top-line impact has been acute.

Champion’s global sales fell by 23 percent in the fourth quarter, with the weakness attributed to both the strategic changes and the “challenging activewear apparel market dynamics.”

Steve Bratspies, Hanesbrands’ chief executive officer, was clear-eyed with analysts on a conference call last week.

“We continue to aggressively implement our Champion performance enhancement plan to strengthen the brand and position Champion for long-term profitable growth,” Bratspies said. “We went into the execution of our Champion strategy with a full understanding that these long-term strategic actions would create real top-line headwinds in the short term, which we’re seeing play out.”

He said the brand was “cleaning up” its inventory while focusing on “building brand heat within our pinnacle product.”

“We’re confident we’re taking the right steps to drive the long-term success of Champion,” the CEO said.

But that long-term success is likely to be in somebody else’s hands.

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