WHP Global and Authentic Brands Group, two brand management firms, are expressing interest in acquiring the popular sportswear brand Champion from its parent company, Hanesbrands. This comes as Hanesbrands faces pressure from activist investors to cut costs and generate cash due to declining sales. Hanesbrands announced in late September that it was evaluating strategic options for Champion, including a potential sale. Interested buyers include both strategics and sponsors.
Champion has estimated annual sales of around $2 billion, making it an attractive acquisition for potential buyers. However, a deal is not expected to be completed anytime soon, and Hanesbrands is not expected to select a buyer until 2024.
Both WHP and Authentic Brands have a wide range of brands in their portfolios and would be well-suited to add Champion to their lists. WHP recently acquired Bonobos from Walmart and has previously purchased Toys R Us and Anne Klein. Additionally, WHP has shown interest in buying Sperry from parent company Wolverine Worldwide. Authentic Brands, on the other hand, owns brands like Aeropostale, Brooks Brothers, and Juicy Couture. They have recently partnered with mega-retailer Shein for various ventures.
Neil Saunders, a retail analyst and managing director with GlobalData, believes that WHP and Authentic Brands’ interest in Champion “makes perfect sense.” These companies have a track record of acquiring struggling brands and turning them around. They have an operational backdrop that allows them to integrate these brands and improve their performance through licensing, international expansion, physical retail, and direct-to-consumer sales.
Champion, while being a well-known sports brand, has seen a decline in demand for its products globally, particularly in the U.S. In the most recent reported quarter, Champion brand sales dropped 16% year over year, with a 25% decline in the U.S. and a 1% decline internationally. This decline in sales has contributed to a broader slowdown across Hanesbrands, which saw an 8.5% decline in revenue in the six months ended July 1. The company’s stock has also dropped by about 34% this year.
Barington Capital Group, an activist firm, has been pressuring Hanesbrands to focus on cash generation and debt reduction to create long-term value for shareholders. In response, Hanesbrands announced its evaluation of strategic options for Champion to simplify and focus its larger business while driving growth and profitability.
Similarly, Sperry, another brand under consideration by WHP, has also experienced sluggish sales. During the three months ended July 1, Sperry sales dropped by 23.5%, contributing to a decline in total revenue for Wolverine Worldwide.
Overall, the potential acquisition of Champion by either WHP or Authentic Brands presents an opportunity for the brand to be revitalized under new management. These companies have a successful track record of turning around struggling brands and improving their performance. However, it remains to be seen who Hanesbrands will select as the buyer for Champion, and a deal is not expected to be finalized until 2024.
