Hanesbrands Inc. (NYSE:HBI) has, in a strategic move, gained acquisition of its competitor Knights Apparel. With this move, the company became the leading seller of Licensed College Logo Apparel in retail and college stores. Previously, Knights Apparel had been responsible for manufacturing and marketing college logo clothing to retail merchants.
Hanesbrands already had the upper hand in college bookstores, but was facing tough competition from Knights in the retail market. Knights Apparel focuses its business on selling college sportswear, t-shirts and sweatshirts, with logos of up to 400 colleges and universities. The deal was worth $200 million and was completed on April 6. Further acquisition expenses and profit contributions have been updated in the HBI’s investor conference call for 1Q2015.
The CEO of Hanesbrands, Richard A. Noll, welcomed the Knights Apparel team to his company. He also highlighted that the acquisition is a great addition and will create opportunities for the growing Active wear wing. He pointed out that this would give his company the opportunity to broaden the low-cost global supply chain for its licensed collegiate apparel wing.
Hanesbrands is expecting to increase the sales of college apparel to reach $450 million annually. Hanes is recognized as the leader in this department, due to its low-cost and quick turn services. The acquisition was paid for by cash on hand and short-term borrowings on HBI’s revolving credit facility.
Even after producing this amazing news, the company failed to reach its 1Q2015 earnings estimates. The reported EPS was $0.22, compared to the $0.23 expectations. The company did, however, register a revenue growth of 14.2%, compared to the same period of the previous year. Unfortunately, analysts had predicted revenue of $1.23 billion, but Hanesbrands was lagging by $0.02 billion.
However, Hanesbrands has raised its EPS for FY2015 to $1.61-$1.66, from $1.58-$1.63. Additionally, the company also raised its expected revenues to $5.9-5.95 billion, from $5.78-5.83 billion.
Hanesbrands Inc. (NYSE:HBI) closed at $32.22 after losing 6.82%. The company currently trades 100.20 million shares in the market and has a 52-week range of $19.49-$34.80.
