US apparel group HanesBrands has made the strategic decision to withdraw from the European market in order to optimize its business operations. Despite a 4.3% decline in revenue in 2020, the North Carolina-based company remains a prominent player in the apparel industry.

HanesBrands’ labels, which include Champion, Playtex, and Dim, faced numerous challenges throughout the year. However, they were able to benefit from the increased demand for athleisure apparel and loungewear during the lockdowns imposed in many countries. This resulted in a 2.8% rise in sales in Q4 2020, with Champion experiencing an impressive 11% increase in sales.

Unfortunately, the company’s operating income took a significant hit in 2020, dropping to $6.5 million compared to nearly $890 million in the previous year. In response to this downturn, HanesBrands has introduced a new strategic plan, known as ‘Full Potential,’ which involves reducing the number of products in its catalog by 20%. Further details regarding the plan will be unveiled in May.

HanesBrands’ growth strategy revolves around four main pillars: accelerating the growth of Champion, expanding its brands and products targeting younger consumers, increasing its online presence, and divesting from non-strategic businesses. Instead of focusing on the European market, the company will concentrate on seizing opportunities in its domestic market.

The company’s disengagement from Europe will have an impact on its central service hub, Hanes Europe, and its underwear labels Dim, Nur Die, Abanderado, and Lovable. It is expected that Dim, a popular lingerie and underwear brand in France, will be put up for sale. HanesBrands’ trade union representatives have already taken initial steps towards facilitating this potential sale.

During a conference call with financial analysts, HanesBrands’ CEO, Steve Bratspies, revealed that the European underwear business generated $500 million to $600 million in revenue in 2020, with an operating margin slightly below the group’s average. Bratspies acknowledged the strength of the European brands but stressed the need to prioritize resources to ensure the best long-term returns.

Dim, which remains highly popular among French consumers, holds a significant market share in hosiery, men’s and women’s underwear, and socks. The potential sale of Dim will have implications for approximately 1,200 jobs in France, with 650 of those jobs located in the town of Autun where Dim produces most of its tights.

Although HanesBrands appears to be committed to its disengagement plans, potential buyers have already shown interest in acquiring Dim. The brand has changed ownership several times in the past and has proven to be resilient through various reorganizations. Dim currently operates 32 stores in France and has a strong presence in mass-market distribution and department stores.

The future of HanesBrands’ European brands in Spain, Germany, and Italy also remains uncertain. The company is currently undergoing a restructuring plan in Spain, which will impact 80 out of its 300 employees. In Germany, HanesBrands employs around 400 individuals and holds a significant position in the local underwear market. In Italy, the company is based in Grassobbio and manages the business of Lovable, a budget underwear brand catering to men, women, and babies.

HanesBrands re-entered the European market in 2014 after acquiring DBApparel, the parent company of Dim, for approximately $400 million. Given the impact of the Covid-19 crisis on the fashion and retail industry, the negotiation for the sale of these assets will be crucial for HanesBrands. The company will need to carefully evaluate offers presented for its European brands in light of the current market conditions.

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Reuters
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