Hanes is absolutely cleaning up. Collectively, Hanes and Fruit of the Loom (owned by Berkshire Hathaway) account for about 75% of the mass market underwear business. But late last year, Hanes really started to pull ahead. Recently however, HBI stepped on the accelerator and its market share lead accelerated meaningfully. The April numbers show a 10 point market share lead - which is pretty huge given that FTL had the pole position just 2 years ago.
- Both price point integrity and sell through rates (near 35%) remain strong. The reason is that there's finally a team in place at HBI that is running this business for growth, instead of being milked (better yet, bled) by former parent Sarah Lee.
But at the same time, Gildan is going after HBI's share in mass channels. My sense is that Warren Buffett won't let FTL lose share forever. They'll push back. I remain of the view that GIL is underestimating the margin implications as it clashes with the titans.
- This remains one of my favorite 'negatively inflecting business model' stories. Check out my 6/2 GIL posting. It lays the story out appropriately.