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Hanesbrands Takes Over Champion Europe: Time to Buy?
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Leading sportswear retailer, Hanesbrands Inc. (HBI - Free Report) , has announced the completion of the takeover of Champion Europe. The buyout is the company’s attempt to fortify its presence in Europe. Champion Europe designs, sources and sells athletic apparel under its brand name to retailers and consumers through 130 outlets in Italy and Greece.
The all-cash transaction is worth 10 times the company’s earnings before taxes, interest, depreciation, and amortization in 2016 and is also subject to cash, debt, and working capital adjustments. The final purchase price is expected to be approximately €200 million. Champion Europe expects net sales of more than €190 million and operating profit of approximately €15 million in calendar 2016.
Hanesbrands added the Champion brand to its portfolio with the takeover of Gear for Sports in Nov 2010, and expects to consolidate the brand with the Champions Europe buyout. Hanesbrands, which owns Champion brand in the Americas, Asia and Australia regions, will be able to expand the brand with the takeover of Champion Europe, which owns the trademark for Champion brand in Europe, the Middle East and Africa. Moreover, the company will have a strong foothold in Europe where it debuted with the DBApparel acquisition.
Hanesbrands recently raised its earnings and sales guidance for 2016 based on expectations of increased synergies from pending acquisitions and debt refinancing.
The company now expects adjusted earnings for fiscal 2016 in the range of $1.89 to $1.95, up from the previous guidance of $1.85 to $1.91. The company has also raised its sales guidance to $6.15 billion to $6.25 billion from the previous $5.8 billion to $5.9 billion. The company expects operating profit in the range of $940 million to $975 million, up from $920 million to $950 million expected previously.
Hanesbrands has two acquisitions scheduled to close in 2016. Apart from the already discussed Champion Europe takeover, the company announced the buyout of Pacific Brands Limited, the leading underwear and intimate apparel retailer in Australia in Apr 2016. The Pacific Brands acquisition is likely to be completed in Jul 2016.
Post the takeover, Sauro Mambrini, present CEO and president of Champion Europe, will continue to oversee the Champion brand’s Europe operations. Meanwhile, Champions Europe will join Hanesbrands’ Champions organization.
Hanesbrands makes strategic acquisitions to strengthen its portfolio. The buyouts provide the infrastructure, capability and systems to cater to a broad spectrum of retail customers, across the entire graphic apparel market.
In Apr 2015, Hanesbrands acquired the collegiate apparel maker, Knights Apparel, to boost its licensed and graphic apparel business. The company expects to fully realize the synergies from the deal in 2016. The acquisition of underwear apparel chain, Maidenform Brands Inc., in Oct 2013, added popular brands like Flexees, Lilyette, Self Expressions and Sweet Nothings to the company’s portfolio.
Hanesbrands currently carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the textile/apparel sector are Perry Ellis International Inc. and Coach Inc. , both carrying a Zacks Rank #2. Another Zacks Rank #2 stock in the consumer discretionary sector is Carter's Inc. (CRI - Free Report) .
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Hanesbrands Takes Over Champion Europe: Time to Buy?
Leading sportswear retailer, Hanesbrands Inc. (HBI - Free Report) , has announced the completion of the takeover of Champion Europe. The buyout is the company’s attempt to fortify its presence in Europe. Champion Europe designs, sources and sells athletic apparel under its brand name to retailers and consumers through 130 outlets in Italy and Greece.
The all-cash transaction is worth 10 times the company’s earnings before taxes, interest, depreciation, and amortization in 2016 and is also subject to cash, debt, and working capital adjustments. The final purchase price is expected to be approximately €200 million. Champion Europe expects net sales of more than €190 million and operating profit of approximately €15 million in calendar 2016.
Hanesbrands added the Champion brand to its portfolio with the takeover of Gear for Sports in Nov 2010, and expects to consolidate the brand with the Champions Europe buyout. Hanesbrands, which owns Champion brand in the Americas, Asia and Australia regions, will be able to expand the brand with the takeover of Champion Europe, which owns the trademark for Champion brand in Europe, the Middle East and Africa. Moreover, the company will have a strong foothold in Europe where it debuted with the DBApparel acquisition.
Hanesbrands recently raised its earnings and sales guidance for 2016 based on expectations of increased synergies from pending acquisitions and debt refinancing.
The company now expects adjusted earnings for fiscal 2016 in the range of $1.89 to $1.95, up from the previous guidance of $1.85 to $1.91. The company has also raised its sales guidance to $6.15 billion to $6.25 billion from the previous $5.8 billion to $5.9 billion. The company expects operating profit in the range of $940 million to $975 million, up from $920 million to $950 million expected previously.
Hanesbrands has two acquisitions scheduled to close in 2016. Apart from the already discussed Champion Europe takeover, the company announced the buyout of Pacific Brands Limited, the leading underwear and intimate apparel retailer in Australia in Apr 2016. The Pacific Brands acquisition is likely to be completed in Jul 2016.
Post the takeover, Sauro Mambrini, present CEO and president of Champion Europe, will continue to oversee the Champion brand’s Europe operations. Meanwhile, Champions Europe will join Hanesbrands’ Champions organization.
Hanesbrands makes strategic acquisitions to strengthen its portfolio. The buyouts provide the infrastructure, capability and systems to cater to a broad spectrum of retail customers, across the entire graphic apparel market.
In Apr 2015, Hanesbrands acquired the collegiate apparel maker, Knights Apparel, to boost its licensed and graphic apparel business. The company expects to fully realize the synergies from the deal in 2016. The acquisition of underwear apparel chain, Maidenform Brands Inc., in Oct 2013, added popular brands like Flexees, Lilyette, Self Expressions and Sweet Nothings to the company’s portfolio.
Hanesbrands currently carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the textile/apparel sector are Perry Ellis International Inc. and Coach Inc. , both carrying a Zacks Rank #2. Another Zacks Rank #2 stock in the consumer discretionary sector is Carter's Inc. (CRI - Free Report) .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>