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Activist Barington pressures Hanesbrands

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Illustration: Sarah Grillo/Axios

Activist investor Barington is calling for strategic changes at underwear maker Hanesbrands' (NYSE: HBI), whose share price has declined more than 50% in the last year.

Why it matters: The hedge fund is questioning the ability of the board and management to run the business, noting that Hanes may need a new CEO and some new directors.

Details: In a letter to Hanesbrands' chairman Ronald Nelson, Barington asks the company to reduce SG&A expense by $300 million per year, reduce inventory to less than 170 days outstanding by year-end, and consolidate its facilities, among other moves.

What they're saying: In a statement, Hanesbrands said that it had engaged with Barington in recent weeks before the letter, defended its board and management and iterated that it is "committed to ongoing refreshment" of its board.

Zoom out: Activist campaigns in the U.S. declined earlier this year along with M&A.

Yes, but: Activist investors' success rates have improved, a jump driven by several factors, including a new SEC policy on shareholder voting, proxy season data shows.

Zoom in: Barington Capital, which specializes in retail and has been involved with some of the biggest names in the sector, hasn't made much noise in recent years.

  • The activist is a small firm but has had success agitating for change at a number of companies, including L Brands, Darden Restaurants, Jones Group and Warnaco.
  • It had about $73 million in assets under management as of March 31, according to a 13-F filed with the SEC.

By the numbers: Hanesbrands had nearly $3.6 billion in debt and about $200 million in cash as of April 1, according to a filing with the SEC.

  • The company has a market cap of about $1.8 billion.
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