HanesBrands Inc. said it expects third-quarter results to come in line with expectations while also announcing that it had acquired Alternative Apparel, a marketer of apparel basics under the Alternative brand to the distributor, online, direct-to-consumer and traditional retail channels.

The company expects to report third-quarter net sales of approximately $1.8 billion, EPS of approximately 55 cents and adjusted EPS of approximately 60 cents – consistent with company guidance. Hanes also expects year-to-date net cash from operations of approximately $330 million.

When HanesBrands reported second-quarter results on August 1, it said it expected net sales of approximately $1.8 billion in the third quarter, an increase of approximately 2.5 percent compared with the third quarter 2016. More back-to-school shipments were expected to fall in the third quarter than a year ago as retailers time orders closer to sales events.

Third-quarter GAAP EPS was expected to range between 54 and 57 cents, and adjusted EPS was expected to be 59 to 61 cents.

Hanes will update its full-year guidance and release full third-quarter results after the market closes on Wednesday, November.1.

“We met our goal of returning to organic growth, and we continued to generate strong operating cash flow,” said Hanes Chief Executive Officer Gerald W. Evans Jr. “Our sales and EPS results, driven by stronger-than-expected international growth, are expected to be consistent with our guidance.”

Alternative Apparel
Hanes has purchased privately held Alternative Apparel in an all-cash transaction valued at approximately $60 million on an enterprise basis. Alternative Apparel, based in Norcross, GA, is expected to have full-year 2017 net sales of approximately $70 million.

The post-synergy purchase price multiple is expected to be approximately 3.5 times projected EBITDA. Hanes funded the acquisition with cash on hand and short-term borrowings on its revolving credit facility. The acquisition closed Friday, October 13, 2017.

Alternative Apparel, founded in 1995, sells Alternative brand better basic T-shirts, fleece and other tops and bottoms. Alternative is a lifestyle brand known for its comfort, style and social responsibility.

The company’s sales and growth are split between the embellishment channel and the retail, online and direct-to-consumer channels. The company operates three Alternative stores – in Venice, CA; SoHo, New York; and San Francisco. The company’s e-commerce site is AlternativeApparel.com.

“This is an exciting acquisition that supports our activewear growth strategy,” Evans said. “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.”

Alternative Apparel outsources production of all of its products, while Hanes self-manufactures the majority of its activewear basics.

HanesBrands is a leading seller of activewear apparel basics and graphic apparel, including T-shirts and fleece, under its Hanes and Champion brands. The company sells to traditional retailers, specialty retailers, schools/clubs and directly to consumers, as well as to embellishment distributors.

“Alternative Apparel has an attractive business model, a very strong and differentiated brand, and a highly talented team of employees,” Evans said. “Adding the Alternative brand and product lineup further diversifies our sales mix as we emphasize growth across all channels, including online.”

Alternative Apparel CEO Evan Toporek will remain with Hanes to continue leading the business out of Norcross.

“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.”

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, the leading seller of licensed logo apparel in the collegiate bookstore channel; Knights Apparel, a leading seller of licensed logo apparel in the mass retail channel; and GTM Sportswear, a leading seller of custom decorated high school teamwear and fanwear. The company has also launched Hanes Ink custom Champion and Hanes college and high school logo apparel available online.

Photo courtesy Alternative Apparel