American sportswear brand Champion’s store opens in Hong Kong.
Chukrut Boudreau | Sopa Images | Sopa (AP Photo)
Brand management companies WHP Global and Authentic Brands Group are both interested in acquiring Champion from its parent company Hans Brand,In consideration Unloading sports equipment production line According to CNBC, under pressure from activist investors.
Hanesbrands announced in late September that it was evaluating strategic options for Champion – more than a month after activist firm Barington Capital Group began pressuring the company to cut costs and generate cash amid falling sales. Hanesbrands said at the time that those options could include selling Champion or other types of strategic transactions. The company also said it could keep the brand.
Hanesbrands has seen strong interest in acquiring Champion from multiple buyers, including WHP and Authentic Brands, people familiar with the matter said. Interested potential buyers include strategic investors and sponsors, people familiar with the matter said.
Champion expects annual sales of about $2 billion, people familiar with the matter said.
The deal is not close to completion, and if Hanesbrands moves forward with a sale, it is not expected to select a buyer until 2024, people familiar with the matter said.
“We are in the early stages of evaluating strategic options and the right path forward for the global Champion business. At the same time, we remain committed to advancing Champion’s new, rigorous channel segmentation strategy, energizing the brand, and leveraging the work completed to globalize product design and segment and simplify our supply chain,” a Hanesbrands spokesperson told CNBC.
WHP and Authentic Brands did not respond to requests for comment. Goldman Sachs, which has been appointed financial adviser to Hanesbrands in the Champion review, declined to comment.
A “perfectly reasonable” deal
Both WHP and Authentic Brands have a wide range of brands in their portfolios, making it a perfect fit to add Champion to their roster. Latest WHP Acquired Bonobos WalmartI have also bought Toys R Us and Anne Klein before.
In addition to Champion, it is also interested in acquiring Sperry from its parent company Wolverine WorldAccording to people familiar with the matter. Wolverine said in May that it was considering selling the footwear brand known for its boat shoes. The company did not respond to a request for comment.
Authentic Brands, which owns brands such as Aeropostale, Brooks Brothers and Juicy Couture, recently partnered with large retailer Shein to sell co-branded clothing lines with companies such as Forever 21.
Neil Saunders, retail analyst and managing director at GlobalData, said WHP and Authentic Brands’ interest in Champion “makes perfect sense.”
“That’s exactly what these companies do. They acquire different brands that are struggling and have a good track record of turning those brands around and trying to redesign performance,” Sanders told CNBC.
“They have a good operating background to integrate these brands, whether it’s through licensing, international expansion, more into brick-and-mortar retail, or selling directly to consumers,” he said. “They almost have an operating model, You just put your brand into it and you start to see better results.”
Champion may be one of the most well-known sports brands on the market, but global demand for its hoodies, activewear and branded apparel has declined, especially in the United States
In the latest reported quarter ended July 1, Champion brand sales fell 16% annually, including a 25% decline in the United States and a 1% decline internationally. Executives said the company expects Champion sales to come under pressure during the remainder of the year.
Weak sales at Champion contributed to an overall slowdown at Hanesbrands, which saw revenue fall about 8.5% in the six months to July 1 as wholesalers withdrew orders for its T-shirts, bras and underwear. Its shares are down about 34% this year.
In August, Barrington sent a letter to Hanesbrands Chairman Ronald Nelson saying the company “must immediately focus on cash generation and debt reduction” to create long-term value for shareholders.
More than a month later, Hanesbrands announced it was conducting a “strategic options review” of Champion as it looks to simplify and focus its larger business while driving growth and profitability.
Meanwhile, Wolverine Worldwide’s Sperry sales are also sluggish.
In the three months ended July 1, Sperry sales fell to $57.4 million, down 23.5% from the same period last year. This economic slowdown led to a decline in Wolverine’s performance, with total revenue for the quarter falling to $589 million, down 17% from the same period last year.
Wolverine’s shares have fallen more than 26% so far this year.
About The Author
