More Hanesbrands Layoffs In 2023? Activist Investors Want Cost Cuts and Have Listed Their Demands


Key takeaways

  • Clothing company Hanesbrands has come under fire from activist shareholder Barington Capital Group
  • It wants the brand to cut costs, pay down debt and appoint new board members
  • Hanesbrands’ share price climbed 5% at the news and is down 16.5% in 2023

It’s not every day that a company faces rebellion in the ranks of its shareholders, but that’s precisely what’s happened to popular tees and apparel manufacturer Hanesbrands this week.

As activist shareholders voice their concerns over the company’s direction, it’s up to the executive board to adopt a new plan — and fast. Here’s the latest on what went down and why Hanesbrands is even in this position in the first place.

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What’s happening with Hanesbrands?

Activist investment firm Barington Capital Group has officially called out Hanesbrands for its weak strategy — and the investment company wants to see change.

In a letter to Hanesbrands’ chairman Ron Nelson, Barington CEO James Mitarotonda criticized management’s slow response to changing times as the reason for the stock’s poor performance in 2023.

“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,” he wrote.

Barington has asked for operational expenses to be cut by $300 million a year and to use the savings to pay down Hanesbrands’ debt, which could mean more layoffs are on the cards for the company. Barington also mentioned appointing new board members — including a potential new CEO.

Hanesbrands’ market performance in 2023

Activist investor moves can go either way when it comes to market performance, but Wall Street took Barington’s side. Hanesbrands’ share price closed 4.8% higher on Tuesday, clawing back some of the losses the brand’s stock has lost throughout 2023.

So far, Hanesbrands has declined 16.5% this year, but the brand’s response was one of quiet defiance. In a press release, the apparel maker said it was “open-minded with regard to additional paths to improve performance and create value” but believed its current plans would bring the growth needed.

As for board changes? They weren’t happy. “The Board and management team are deeply experienced in areas relevant to our strategy and portfolio”, the company stated.

The bottom line

We could be at the start of a long battle for Hanesbrands if the management team and Barrington come to blows. Hanesbrands’ earnings report is due on Thursday, so we’ll know more about whether Barington’s suggested plan for the company is justified or not.

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