Hanesbrands Stock Sees Rise Amid Evaluation of Potential Sale
Hanesbrands (ticker: HBI) announced on Tuesday that it is exploring strategic alternatives for its global Champion business, which may include a potential sale. As a result, shares of Hanesbrands rose 2.8% to $4.59 in morning trading. However, the stock has experienced a significant decline of 28% this year.
Maximizing Shareholder Value
The company stated in a news release that it will assess various options to maximize shareholder value, such as a potential sale, other strategic transactions, or maintaining the brand within the larger company. Chairman Ronald Nelson emphasized the significant improvements made within the Champion business in recent years, highlighting the clear distinction between the company’s innerwear and activewear segments.
No Guarantee of Outcome
While management expressed their commitment to evaluating strategic alternatives, they also noted that there is no guarantee that a transaction or alternative outcome will occur. The assessment process has no predetermined timeline and may be terminated at any time.
Activist Investor’s Influence
Last month, Barington Capital, an activist investor, urged Hanesbrands to make changes to its board of directors and management team, as well as reduce costs, inventory levels, and debt burden. Barington Chairman James Mitarotonda criticized the company’s response to market challenges and its excessive debt, claiming that these factors are hindering shareholder value creation.
Following L Brands’ Example
Barington Capital has previously exerted its influence on companies such as L Brands, successfully pressuring them to separate their subsidiaries. In July 2021, L Brands’ board approved the separation of Victoria’s Secret and Bath & Body Works into two distinct entities.
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