Hanesbrands Looks to Boost Revenue Growth by $1 billion From the Champion Brand

Hanesbrands, the well-known athletic gear company is looking to drive one billion dollars in revenue growth, or, to put it differently, to increase overall revenue to 7.4 billion in 2024 from the current $6.25 billion.

On top of its goal to grow revenue by 1$ billion for the Champion athletic brand, the company also revealed a 3-year growth plan during a virtual investor day event last week. According to Hanesbrands, Champion sales will reach $2 billion in the current year, and if everything goes according to plan, sales are projected to be about $3 billion by 2024. Chief Executive Steve Bratspies has said in an interview that, let us quote:

“Champion is uniquely positioned at the intersection of athletic wear and lifestyle”

In case you didn’t know, Champion is a 100-year-old brand which, according to Bratspies, brought the sports apparel business to college campuses and even invented the sports bra. Due to its strong heritage, and a long history in both athletic and casual gear, the company is optimistic about its future prospects, and, let’s quote Steve Bratspies again:

“The iconic Champion hoodie is something that we view as a gateway to category. The second time customers come back after buying a hoodie, they buy more things.”

Hanesbrands strategy includes boosting demand by adding more products to its line-up, including sports apparel and casual footwear for both women and kids. The 3-year plan is dubbed the “Full Potential” strategy, and it’s supposed to bring the company $1.2 billion in total revenue growth (400 million/year), which include $200 million in incremental sales to give new life to the innerwear and underwear category (intimates, etc.).

More precisely, Hanesbrands will try to double its market share in the underwear and innerwear category, with young customers (under the age of 39). According to Steve Bratspies, the launch of the Comfort Flex Fit Total Support Pouch boxer briefs 2 months ago is the way to go in the future, and the company plans to spend a little over $160 million in incremental investments over 3 years, by 2024 respectively, which includes $90 million for marketing purposes.

To offset the extra spending, Hanebrands will work on sustainability and technology initiatives, as well as cost-saving strategies. After the company offered a glimpse into its Full Potential program in February 2021, shares have rallied by more than 32 percent for the year to date, and gained 4.2 percent over the past 3 months. Bratspies also said that his company owns 70 percent of its supply chain, which is a big factor working in its favor, as it allows Hanesbrands to be “nimble” (exact quote) in a post-covid world, and to meet and exceed customer demand, even the ever-changing customer behavior that arose with the pandemic.

Speaking of changing customer behavior caused by the covid pandemic, due to its broad distribution at retailers that also sell groceries, Hanesbrands benefited greatly from the increased use of in-store pickup since 2020. For example, you can buy Hanesbrands gear at Walmart and Target , and Bratspies describes his company’s brands to be almost like a consumable (exact quote).

“The frequency of pickup is probably more than other apparel.” Wells Fargo upgraded Hanesbrands shares to equal weight from underweight after the event, and market analysts described the new leadership to be nothing short of impressive, after Bratspies left Walmart Stores in August last year and joined Hanesbrands, saying that the business has momentum and their strategy of simplifying the model sounds good.

Analysts wrote after Wells Fargo raised its price target to $20 from $13 that: “Following years of under-investment and poor capital allocation, new Hanesbrands management has unveiled plans to aggressively spend behind core brands in order to drive organic top-line growth and take back market share”