Hanesbrands Inc has announced that it will cut production of basic apparel used in screen printing and exit its private label business and the Outer Banks sportswear brand as it seeks to prop up falling margins.
As part of the restructuring, Hanesbrands said it has agreed to sell its European imagewear division to an affiliate of the Netherlands-based Smartwares B.V. for 15 million euros ($18.80 million).
The imagewear segment, which sells basic apparel such as T-shirts to wholesalers in the screen-print market, accounts for 8 percent of the company’s sales.
Hanesbrands, owns Hanes, Champion and the Wonderbra brands amongst others, said the restructuring would reduce expected sales by about $60 million, mostly in the second half.
The company has informed its U.S. wholesale screen-print channel customers of its decision to discontinue private-label production and exit its Outer Banks business. Hanes will work with affected customers on transition plans. Hanes will change the name of its imagewear operations to branded printwear, which will be focused on Hanes and Champion branded products in the United States.
“We are a branded company. That includes being committed to branded printwear in the United States where we can partner with our wholesale customers to take advantage of our strong consumer brands and product differentiation,” said Hanes Chairman and CEO Richard A. Noll. “With our exit from Europe, we can devote all of our energies to growing our branded portfolio in core geographies in the Americas and Asia.”
Hanesbrands Europe GmbH told PPD this afternoon that they would be issuing a statement tomorrow (30th May).
The company, which expects to incur non-cash pre-tax charges of $85 million to $95 million in the second quarter, said the changes would have an insignificant impact on operating profit, and reiterated its previous 2012 earnings forecast of $2.50 to $2.60 per share.
Hanesbrands reported a quarterly loss for the first time in two years in April, as rising cotton costs and increased competition ate into its margins.