HanesBrands’ Board of Directors and executive leadership team announce the “evaluation of strategic options” for its global Champion business. The announcement comes a little over a month after investor Barington Capital Group called on HanesBrands to cut costs and debt and possibly appoint a new CEO.

A Call for Action, Answered

“We believe that HanesBrands currently sits at a critical juncture and must immediately focus on cash generation and debt reduction in order to create long-term value for shareholders,” Barington CEO James Mitarotonda wrote to HanesBrands Chairman Ronald Nelson in early August.

With help from financial and legal advisors (Goldman Sachs & Co., Evercore, Jones Day, and Kirkland & Ellis LLP), Hanes plans to look at options to create that long-term value for shareholders. This could be a potential sale or other strategic transaction, as well as Champion continuing to operate as part of HanesBrands.

“HanesBrands has been struggling for a while and is being dragged down by excessive debt. As such, it was always going to have to make some kind of move to sort out its financials,” says GlobalData retail analyst Neil Saunders. “If HanesBrands wants to raise funds quickly to pay down debt then Champion is likely to be the brand that the company sacrifices.”

While there is no guarantee the assessment process will result in a transaction or other strategic outcome, the Winston-Salem Journal states these types of announcements result in a sale “more often than not.”

Ronald L. Nelson, chairman of the board, states in a press release: “Champion is a renowned global lifestyle brand, with a storied heritage in sports as the pioneer of American athletic wear. In recent years, the executive leadership team has implemented significant structural improvements within Champion that have resulted in greater distinction between the company’s innerwear and activewear businesses. With this in mind, and after careful consideration, we have commenced a comprehensive review of strategic options for the global Champion business. We are committed to working with our advisors to identify the right path forward that enables both Champion and HanesBrands to reach their fullest potential and maximizes value.”

Hanes CEO Steve Bratspies says the company is “continuing to take the actions necessary to adapt” and ensure its brands are on a path to long-term success. He also adds that the team continues to focus on advancing initiatives that “drive revenue growth, margin improvement, and greater cash flow.”

Hanes does not have a timeframe for when the process will be completed and can pause or end the review at any time. It does not plan to comment further until “disclosure is appropriate or necessary.”