Shares of Hanesbrands, Inc. (HBI) reached a new 52-week high of $127.02 on Feb 25 after the company announced its intention to acquire collegiate logo apparel maker Knights Apparel the same day. The company had also announced a stock split and dividend hike last month.
In fact, shares of this apparel retailer have been on the rise ever since it reported strong fourth quarter results on Jan 30 backed by its margin-enhancing Innovate-to-Elevate strategy. The company also announced a stock split and dividend hike in the same month as part of its strategy to return greater value to shareholders.
Growth Drivers
On Feb 24, Hanesbrands announced that it has inked an agreement to take over collegiate logo apparel seller Knights Apparel for $200 million in cash as part of its strategy to boost its collegiate apparel line-up. (Read: Hanesbrands to Boost Apparel Line-up with Knights Buyout)
The strategic acquisition will help Hanesbrands to boost its licensed and graphic apparel business. While Knights Apparel sells T-shirts, sweatshirts and other sports apparel with college logos and graphics primarily to mass merchant retailers, Hanes’ Gear for Sports division is already a leading seller of licensed collegiate apparel in university bookstores.
The textile retailer is on a roll with two back-to-back acquisitions in the past one year. The Knight’s Apparel acquisition was preceded by the buyout of Europe-based intimate apparel company DBApparel in August last year. These frequent strategic buyouts will bolster its presence in the global intimate apparel and hosiery category.
Hanesbrands also announced a 33% hike in its quarterly dividend and a 4-for-1 stock split on Jan 28, 2015 as part of its strategy to return greater value to shareholders.
The company also reported decent fourth-quarter results on Jan 30 wherein earnings per share of $1.49 beat the Zacks Consensus Estimate by 2.8% and shot up 49% from the prior-year quarter. Quarterly revenues gained 18% and came in at $1.52 billion, driven by more than high single-digit growth in all the segments. Margins inflated 140 basis points backed by the company’s Innovate-to-Elevate strategy.
Stocks That Warrant a Look
Hanesbrands sports a Zacks Rank #1 (Strong Buy). Other well-ranked stocks in the textile apparel sector include Gildan Activewear Inc. (GIL), Perry Ellis International Inc. (PERY) and Lululemon Athletica Inc. (LULU) carrying a Zacks Rank #2 (Buy).
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