Please ensure Javascript is enabled for purposes of website accessibility

Spurned by Target, Hanesbrands Strikes Deal With Amazon

By Timothy Green - Mar 10, 2020 at 10:30AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The apparel company’s popular C9 by Champion activewear line is now an Amazon exclusive.

Back in 2018, Target dropped a bombshell on basic apparel company Hanesbrands (HBI -1.48%), which sells products primarily under the Hanes and Champion brands. Target announced that it would end its exclusive deal to carry C9 by Champion, a value-oriented lineup of activewear attire that had been sold at the retailer for years.

Financially, this was a big deal for Hanesbrands. The company disclosed that C9 accounted for $380 million of revenue over the 12-month period preceding the announcement. Hanesbrands' annual revenue last year was just shy of $7 billion.

The contract with Target ended early this year, and up until now Hanesbrands had little to say about the future of the C9 line. On Tuesday, the company announced a path forward. Hanesbrands has struck a multiyear deal with Amazon Fashion making C9 by Champion an Amazon exclusive worldwide. The products are already available on Amazon's website.

The Champion logo.

Image source: Hanesbrands.

Taking C9 global

C9 is launching on Amazon with over 100 styles, with the focus currently on the most popular items. Over time, Hanesbrands expects to expand the assortment of items available. C9 products will join mainline Champion products already available through Amazon Fashion. This deal also marks the first time that C9 is available globally.

Initial products include leggings, jackets, t-shirts, shorts, underwear, socks, and sports bras, as well as various accessories like gloves, shoes, and fitness equipment. The lineup will be aimed at value-conscious consumers.

"We are delighted to launch the C9 Champion line with Amazon Fashion to provide consumers with a new channel to access the brand. C9 Champion had strong consumer equity and a loyal following for the past 15 years," said Hanesbrands CEO Gerald Evans Jr.

A step in the right direction

Hanesbrands' guidance for 2020 took into account the exit from the C9 business, so it's unclear whether that outlook includes the impact from this deal. The company had guided for 2020 sales between $6.675 billion and $6.775 billion, down a few hundred million dollars from 2019.

Selling C9 on Amazon compared to Target has a downside: There's a lot more competing apparel available on the e-commerce giant's website. In a Target store, C9 was popular partly because options for low-cost athletic wear were limited by the size of the store. Target launched its own line of activewear under the All in Motion brand earlier this year, effectively replacing C9.

On the other hand, selling through Amazon puts the C9 lineup in front of more people around the globe. While it will take time for C9 sales to approach previous levels, sales could soar beyond those levels if the inexpensive products catch on with Amazon customers.

Champion is a growth engine for Hanesbrands, offsetting sluggish sales in the company's core innerwear business. Hanesbrands expects global Champion sales to grow by 10% in 2020. Overall activewear sales in the U.S., which are spread across multiple brands, will be down around 17% this year.

Striking a deal with Amazon for the C9 line provides Hanesbrands another way to grow Champion sales in the coming years. 2020 will be a transition year for the company, with sales down due to Target's decision to dump the brand. It's also unclear at this time how the novel coronavirus outbreak will impact Hanesbrands' results. In the long run, the Champion brand is positioned to continue to drive growth for the apparel company.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Timothy Green owns shares of Hanesbrands. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hanesbrands Inc. Stock Quote
Hanesbrands Inc.
$10.64 (-1.48%) $0.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.