Rebuilding a champion brand

Hanesbrands’ (NYSE: HBI) socks and underwear business has been challenged lately, with many large retailers promoting their own in-house brands over those of Hanesbrands. Despite a recent rally, the company’s stock is still well below the multiyear high it reached in 2015 — presenting an attractive opportunity for income-focused, long-term investors. The company’s core innerwear business has been suffering from sales declines, and overall growth has been sluggish. Last year, the loss of an exclusive deal with Target and the bankruptcy of Sears Holdings added to the pessimism surrounding the stock. Don’t count out Hanesbrands yet, though, as it has a slew of strong apparel brands around the world — featuring names such as Hanes, Champion, Bonds, Maidenform, DIM, Bali, Playtex, Bras N Things, Nur Die/Nur Der, Alternative, L’eggs, JMS/Just My Size, Lovable, Wonderbra, Berlei and Gear for Sports. Hanesbrands has been on an acquisition spree in recent years, which has put the brakes on dividend growth, as management opted to pay down debt that was used to fund the new businesses that it added. That won’t last forever, though, and management has stated that returning cash to shareholders remains one of its top long-term capital allocation priorities, so future dividend growth is likely. With a price-to-earnings (P/E) ratio recently in the low teens and a dividend that recently yielded 3.4 percent, Hanesbrands should appeal to both value-seeking and incomeseeking investors.