Activist Investor Barington Pushes For Major Overhaul At Hanesbrands: Report

Apparel manufacturer Hanesbrands Inc. HBI is attracting the attention of activist investor Barington Capital, which is urging the company to make significant changes to its board and enact strategies to reverse the decline in its stock value.

Barington Capital has acquired an undisclosed stake in Hanesbrands, known for its underwear and T-shirts. The firm is pressing the company to appoint new board members with expertise in apparel and manufacturing and is even considering the possibility of a new CEO, The Wall Street Journal reports.

Push For Change

Barington's intentions regarding the nomination of its director candidates for Hanesbrands' upcoming shareholder meeting remain unclear. The nomination window is open from Oct. 17 through Nov. 16. 

Hanesbrands indicated that its management team has been in communication with Barington for the last year, maintaining a commitment to continual rejuvenation and ensuring a balanced combination of skills and diversity. The company also conveyed its willingness to explore further avenues to enhance performance and generate value.

Cost-Cutting Measures

Barington, known for successfully advocating changes at companies like L Brands, Avon Products and Darden Restaurants, is also urging Hanesbrands to reduce costs by at least $300 million annually and decrease its inventory levels, WSJ reports. 

The Winston-Salem, North Carolina-based company, which also owns brands like Champion and Bonds, has seen its shares fall 18% this year, in contrast to the S&P 500 Retail index's 10% rise.

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Financial Struggles

The stock's decline was exacerbated earlier this year when Hanesbrands announced the elimination of its dividend to strengthen its balance sheet. The company's total sales dropped 8% in 2022, and a further decline is expected this year. Barington Founder James Mitarotonda criticized the management's response to recent market challenges, holding it accountable for the company's deteriorating results.

Management Concerns

CEO, Stephen Bratspies, who took his position in August 2020 after leaving Walmart, has been targeted by Barington, which argues that his experience is not suitable for his role at Hanesbrands.

The company also lost its chief financial officer earlier this year. Barington believes that Hanesbrands' management has not adequately addressed industry challenges, leading to a debt accumulation of over $3.5 billion against a market capitalization of about $1.8 billion.

HBI Price Action: Hanesbrands shares were trading 1.25% higher at $5.28 Tuesday morning. 

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo: Shutterstock.