Leading apparel retailer Hanesbrands Inc. HBI completed the takeover of collegiate logo apparel seller, Knights Apparel, on Apr 6 for $200 million in cash on an enterprise basis. The acquisition was funded through cash on hand and short-term borrowings on its revolving credit facility. The acquisition was announced on Feb 25, 2015.
Hanesbrands is expected to announce sales and profit contributions from the acquisition on the first-quarter fiscal 2015 earnings conference call to be held later this month.
The acquisition is a strategic fit for Hanesbrands. While Knights Apparel sells T-shirts, sweatshirts and other sports apparel with college logos and graphics primarily to mass merchant retailers, Hanesbrands’ Gear for Sports division is a leading seller of licensed collegiate apparel to university bookstores. The acquisition will boost Hanesbrands’ licensed and graphic apparel business and allow Knights to leverage its strong brands, company-owned apparel production and graphic attribution, and embellishments. With the takeover, Hanesbrands also became the leading seller of licensed college logo apparel in both the retail and college bookstore channels.
We believe that the acquisition synergy and Hanesbrands’ endeavor to continuously innovate will offer it a competitive advantage.
The acquisition is expected to add more than $450 million to annualized sales of licensed and graphic apparel and provide significant growth opportunities for college licensed brands.
Currently, Hanesbrands has a Zacks Rank #3 (Hold). Better-ranked stocks in the textile apparel sector include G-III Apparel Inc. GIII, Perry Ellis International Inc. PERY and Columbia Sports Inc. COLM. While G-III Apparel sports a Zacks Rank #1 (Strong Buy), Perry Ellis and Columbia Sports have a Zacks Rank #2 (Buy).
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