来源丨创业邦(en:ichuangyebang)
Author丨Guan Ju
Editor丨Sea waist
Image source丨Picture insect creativity
Due to the continued poor performance, the trendy brand Champion may be sold again.
Recently, Authentic Brands Group (ABG), an American brand management company, and HanesBrands Inc. (HBI), an apparel group, reached a preliminary agreement for the former to acquire Champion for about US$1 billion (about 7.2 billion yuan), and the transaction will be completed in May and June.
HBI, Champion's parent company, the largest underwear maker in the United States, has been trying to improve Champion's performance in recent years, but with little success. HBI itself was mired in losses, and its stock price plummeted.
The acquirer, ABG, is one of the world's largest sports and entertainment brand licensing groups, and David Beckham's personal brand is in charge of it.
ABG is good at dipping the bottom, and this time it was a good time again.
The century-old brand will be sold
Champion is a brand with a history of more than 100 years, founded in 1919 by father and son in Rochester, New York, USA.
College students are Champion's first major customer base.
In 1926, Champion began supplying uniforms to Wentworth Military Academy, which was the beginning of its onward move to the university campus.
Champion invented the hooded sweatshirt in the 30s, which caught the attention of the University of Michigan football team, which became the first college sports team to wear Champion clothing. It wasn't long before Champion clothing became a popular wear for many college students.
In the 70s, Champion launched fashionable sportswear for women and pioneered sports bras.
In the 80s, hoodies with the blue and white Champion logo became the uniform of the hip-hop world, worn on occasions from the stadium to the streets and stages.
In the 90s, Champion became the official sportswear sponsor of the NBA and the U.S. Olympic team, and many basketball superstars such as Michael Jordan wore Champion's sportswear. This made Champion's reputation skyrocket.
The Champion logo first appeared in 1956 Source: Champion Europe official website
At this time, Champion had been listed on the New York Stock Exchange for many years. In 1988, Champion's profits doubled to $14.8 million. Excellent performance and good growth potential make it a target for hostile takeovers.
A New York-based investment group collected Champion's shares in the open market for several years in a row, and in December 1988 offered to acquire Champion for $55 per share. In January of the following year, the company raised its offer to $61 per share.
At this time, a large conglomerate called Sara Lee became a white knight, announcing the acquisition of Champion for $77 per share, for a total of $320 million. On the day the news was announced, Champion stock price hit a new high of $63.
Sara Lee was a well-known American food brand that was also expanding into the clothing sector at that time.
In 2005, Sara Lee Group spun off its apparel business and changed its name to Hanesbrands.
After going public, HBI continued to expand its territory through acquisitions, and since 2010, it has acquired seven apparel companies.
At present, HBI has two main brands, Hanes and Champion, and is the largest underwear manufacturer in the United States and the world's largest textile manufacturer.
Among them, Hanes is the number one selling clothing brand in the United States, with products covering underwear, bras, socks, T-shirts, fleece and shapewear, and Hanes is present in 9 out of 10 American households.
Source: HBI official website
HBI's brand portfolio also includes Bonds, Australia's largest lingerie brand, Maidenform, the No. 1 shapewear brand in the United States, and Bali, the No. 1 bra brand in the United States.
Unlike most apparel companies, which outsource production and operations, HBI has built a global industrial chain to design, manufacture and sell multiple brands of apparel in-house, and more than 70% of the garments are produced by its own factories or factories of dedicated contractors.
According to the 2023 financial report, HBI has 48,000 employees in 29 countries, 88% of which are located outside the United States, mainly in Central America, Asia and the Caribbean.
HBI's share price soared to $30 in 2015, giving it a market capitalization of more than $10 billion. Since then, it has been on a downward spiral and is now around $5 with a market capitalization of just $1.6 billion.
The plunge in stock prices is positively correlated with poor performance. From 2021 to 2023, HBI's net sales were $6.8 billion, $6.2 billion and $5.6 billion, respectively, declining, and net profits were $80 million, -$130 million and -$20 million, respectively.
Champion is the "mainstay" of HBI's revenue, accounting for nearly one-third of net sales. However, from the second quarter of 2022 to the end of 2023, Champion's global sales have declined for seven consecutive quarters. In constant currency terms, Champion's global sales fell by 15%, 15%, 20% and 24%, respectively, in constant currency terms. The decline was most pronounced in the U.S. market, and the rest of the world also underperformed, with only China and Latin America performing modestly.
Champion's agency battle in China
In early 2017, Yongjia Group took the lead in introducing Champion to China, the company obtained the distribution rights of Champion in Chinese mainland, and opened 5 Champion stores within a year.
Yongjia Group is a company engaged in the OEM production of sportswear and fashion retail business, which was listed on the Hong Kong Stock Exchange in 2006.
Two years later, Belle Fashion Group also obtained the right to represent Champion apparel and accessories in China. Unlike Yongjia Group, which only obtains offline distribution rights, Belle can conduct online and offline omni-channel sales.
Subsequently, Belle went one step further and in 2021, she obtained the trademark rights of Champion in shoes and accessories, and began to design, manufacture and retail related products in China.
For Yongjia Group, Belle is too strong an opponent. Yongjia has less than 200 stores in mainland China, while Belle has more than 8,000 directly-operated stores.
Due to the epidemic and Belle's competition, in 2022 and the first half of 2023, Yongjia Group's Champion business will have operating losses of about HK$52 million and HK$34 million, respectively.
In stark contrast, it is the explosion of Belle's Champion business.
According to the prospectus submitted by Belle Fashion in March 2024, its revenue from Champion exceeded RMB1 billion in 2021 and continued to grow in subsequent years. Belle will also open about 100 new Champion stores around 2023.
Yongjia Group announced its exit in October 2023, and Belle spent 104 million yuan to acquire the Champion inventory and 69 store assets held by the former. Belle Fashion becomes the de facto exclusive agent and licensee of Champion in China.
Industry insiders said that the change of the parent company will not affect the cooperation between Champion and Belle Fashion.
Acquisition of Maniac ABG
Champion的新东家可能不被人所熟知,但旗下品牌Reebok、Forever 21、Barneys New york、Brooks Brother等等在美国乃至全球都家喻户晓。
Founded in 2010, ABG is one of the world's largest sports and entertainment brand licensing groups, headquartered in New York City with offices in Los Angeles, Toronto, Mexico City and Shanghai.
ABG currently owns more than 50 apparel, sports and entertainment brands, and holds the image rights or legacies of many celebrities such as boxing champion Ali, Elvis Presley, Marilyn Monroe and many others. It also entered into a strategic partnership with David Beckham to co-own and manage his eponymous personal brand.
ABG brand portfolio Source: ABG official website
ABG's operating model is unique in that it acquires underperforming brands at low prices, repackages and repositions, reorganizes internally, and brings them to market.
However, ABG is neither responsible for production nor management and sales, but works with manufacturers, wholesalers and retailers to generate revenue through licensing fees for the brand.
ABG's founder, Jamie Salter, was born in Toronto, Canada in 1963. He started selling surfing equipment in the 80s of the 20th century and subsequently saw a bigger opportunity in the then burgeoning sport of skiing.
With a keen intuition, Salter bought a snowboard company for $35,000 and sold it for $5 million four years later.
He then co-founded Ride Inc. in 1992, which grew to become the world's second-largest distributor of snowboards, and took the company public two years later.
Prior to founding ABG in 2010, Salter was involved in the founding of two financial holding companies, where he led several acquisitions of best-selling brands. This laid the foundation for him to make a big impact at ABG.
ABG's investors include Blackstone, CVC Capital, Temasek, Qatar Investment Authority and other well-known institutions, and David Beckham is its individual shareholder.
In July 2021, ABG submitted a prospectus seeking to list on the NASDAQ, but it was ultimately unsuccessful.
As can be seen from the prospectus, in 2019 and 2020, ABG's revenue was US$480 million and US$490 million, most of which came from licensing fees, and net profit was US$96.53 million and US$225 million, respectively. The company was valued at $12.7 billion in 2021.
In the past two years, due to the global economic downturn brought about by the epidemic, ABG, which is good at "buying the bottom", has ushered in an opportunity for expansion.
In August 2021, ABG announced the acquisition of Reebok from Adidas for 2.1 billion euros, which is ABG's largest acquisition to date.
Then he "ate" the American clothing brands Brooks Brothers and Forever 21 in one go.
In April last year, ABG announced the acquisition of the intellectual property rights of the American luxury brand Vince, and ABG held a 75% stake in the latter after the transaction was completed. In June last year, ABG Group also completed the acquisition of Hunter, a 160-year-old lifestyle brand in the UK, in a deal worth about £100 million.
ABG's brands now generate more than $29 billion in annual global sales and operate more than 13,300 stores and shop-in-shops in 150 countries.
If the acquisition of Champion is successful, ABG will add another century-old brand to its map, and Champion may be able to return to the path of growth.