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Champion on Track to Become Apparel’s Next $3 Billion Baby

Hanesbrands’ Champion business is on a roll and well on its way to becoming a $3 billion brand.

“We will surpass our $2 billion goal next year, two years early, and we do believe that the next billion can emerge over the next few years,” CEO Gerald Evans told analysts Thursday on a conference call. “We have several factors supporting our view. We see strong secular trends within the activewear category. Champion’s brand equity scores are growing, particularly with Gen Z and millennials.”

Hanesbrands is expanding Champion’s product portfolio, including a broader assortment within performance, kids’ and women’s lines, as well as in casual footwear and accessories.

“And we’re increasing distribution in large economies such as China and South Korea,” Evans said. “All of which positions us for continued double-digit Champion growth in 2020 and beyond.”

In the third quarter ended Sept. 28, global Champion sales increased 26 percent, beating the company’s expectations for the third straight quarter. This consisted of 29 percent growth in domestic Champion business and 24 percent gains in international.

The company is also expanding margins in the Champion business, “as our brand investments normalize and we leverage prior distribution investments,” the CEO said.

The global Champion business has generated more than $1 billion of incremental sales in just three years, he said. Year-to-date, on a constant currency basis, global Champion revenue has grown approximately $470 million. Growth through the first nine months of this year is already more than $100 million higher than the growth for all of 2018, Evans noted.

“Looking ahead, we believe Champion is well positioned to generate another billion dollars of growth over the next several years,” he said.

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“We increased our fourth quarter Champion activewear forecast by approximately $15 million to reflect a strong demand,” Barry Hytinen, chief financial officer, said. “We now expect Champion activewear…to increase at a high teens rate as compared to our prior outlook for a low double-digit growth.”

Evans said the brand’s growth is coming from a combination of continuing to push up to the more premium levels, while building the distribution with current customers across geographies and into new customers.

“From the standpoint of the business mix today, it’s more mixed into the men’s side of things, but we certainly see the opportunity to continue to make that a bigger mix of women’s, and then kids’ is an area of tremendous opportunity, as well,” he added. “Also, the performance across the genders is a small but growing area that we also see as a growth potential for us. So, as you can tell, we are very optimistic and very bullish on this brand, because we see lots of ways to keep growing it.”