Regional Report Triad April 2013

REGIONALREPORT Triad

Hanes unveils new look

It wasn’t that long ago that Hanesbrands Inc. was the ugly duckling of big apparel companies in the Triad. While the maker of T-shirts, sweat shirts and pants, underwear, hosiery and bras was consumed with paying down debt, its Triad neighbor, VF Corp., was building a fashion juggernaut on the strength of high-margin brands.

So it was with no small amount of glee that Hanesbrands CEO Rich Noll recently told analysts that the company had decreased its debt in 2012 to 2.5 times EBITDA — earnings before interest, taxes depreciation and amortization — the lowest ratio since its spinoff from Downers Grove, Ill.-based Sara Lee Corp. in 2006. “That has been a long time coming, and it feels really good,” Noll says. Hanesbrands got its debt under control the old-fashioned way — cutting costs, selling noncore businesses in Europe and the U.S. and wringing more profit from its best lines. Underwear sales, benefiting from new products and more shelf space, were up 3%, with profit increasing 18%.

Hanesbrands stock has risen smartly — gaining about 25% in the six months that ended in early March. VF shares were up only 10%. (Of course, VF’s price is four times Hanesbrands’.)
VF is built on branding, and a Hanes T-shirt doesn’t convey the same cachet as a North Face jacket, but the companies are starting to look similar. For instance, Hanesbrands has shifted more manufacturing overseas, a move VF made much earlier.

There is, however, one key way they differ — the international market. Domestic sales account for 90% of Hanesbrands’ revenue and about 60% of VF’s. When spinning off Hanesbrands, Sara Lee sold many of its best-known European apparel lines, and last summer, Hanesbrands sold operations there that supplied wholesalers with T-shirts for screen printing.

Briefs

GREENSBORO — North State Flexibles will expand its plant here, investing $4.4 million and adding 41 jobs to its local workforce of more than 120 within three years. The company, which makes flexible packaging products, is a subsidiary of Canada-based St. Johns Packaging.

TROY — Aseptia raised $6 million to expand manufacturing capacity at subsidiary Wright Foods’ plant here. The Raleigh food-processor makes fruit sauces, beverages and soups that have a shelf life longer than 12 months but don’t contain preservatives. Durham-based venture-capital fund SJF Ventures is among the investors.

MOCKSVILLE  —   Pro Refrigeration will open an East Coast manufacturing plant here, investing $4.9 million and hiring 85 within five years. The Auburn, Wash.-based company designs and makes refrigeration systems for the dairy, food-processing, medical and craft-brewing industries. Average annual salary will be $38,296, higher than Davie County’s $30,415.

HIGH POINT — High Point Chamber of Commerce President and CEO Tom Dayvault will step down at the end of the year. He has led the booster group since 2001.

MOUNT AIRY —  Awesome Products, which makes cleaning supplies and laundry detergent, will build a plant here, investing $22 million and hiring 90 within three years. It will make household cleaners such as bleach and degreasers and also serve as a distribution site for the Buena Park, Calif.-based company. Average annual salary will be $33,611, higher than Surry County’s $30,456.

WINSTON-SALEM — Krispy Kreme Doughnuts signed a franchise agreement with Huan Hsin, a subsidiary of Singapore-based Huan Hsin Holdings, to open 10 stores in Taiwan within five years. The move is part of the Winston-Salem-based company’s push into Asia.