The document compares the financial performance of HBI and Under Armour (UA) across several metrics from inventory turnover to profit margins. It finds that HBI has advantages over UA in SGA/Sales, receivables turnover, and profit margins, but a disadvantage in COGS/Sales. Most other metrics show parity. The document then analyzes HBI's strengths as a well-known brand with effective inventory management and weaknesses as over-reliance on top customers. Opportunities for HBI include expanding internationally while threats include volatility in the apparel market and competition from lifestyle brands. Recommendations are made for HBI to focus on reducing COGS, increasing inventory turnover through promo spending

1. Solo Homework Company Analysis –
BAD 490
By Juan Francisco Sanchez
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2. Financial Performance Comparison
Between HBI & UA
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HBI Under Armour HBI/UA
Comparison
Advantage,
Disadvantage or
Parity
Inventory Turnover 3.2 3 1.07 Parity
Fixed Asset Turnover 8 7.4 1.08 Parity
SGA/Sales 0.3 0.4 0.75 Advantage
COGS/Sales 0.6 0.5 1.20 Disadvantage
Development
Cost/Sales N/A N/A N/A N/A
Fix Assets/Sales 0.1 0.1 1 Parity
Receivables Turnover 26 11 0.5 Advantage
Profit Margin 0.08 0.06 1.3 Advantage

3. Financial Performance Comparison Between
HBI & UA
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I/O
Industry Drives Perfect
RBV
Unique Strategy
• In the Industrial Organization (I/O) view of the firm,
performance is due largely to the industry in which
a company competes.
• Mostly Parity
• Company performance is driven by its individual strategy,
and unique resources and capabilities
 HBI & UA are significantly different
• HBI has 4 significant differences vs. Under Armour.
• It has three major advantages on SGA/Sales, Receivables
Turnover and Profit Margin.
• It has a major disadvantage on COGS/Sales.
• Finally HBI has three parities on Inventory Turnover, Fixed
Asset Turnover and Fix Assets/Sales.
• HBI and UA do not publicly list Development Costs.
 3 Parities
 4 significant difference

4. HBI SWOT Analysis
Strengths and Weaknesses
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Strengths Weaknesses
• Hanes has a strong brand awareness and brand
name
• The brand has good advertising and visibility
• Effective inventory management is a key
component of HBI’s future success
• HBI has a long strong business relationship
with its customers
• HBI owns the majority of their supply chain
• Technological developments and innovation is
helping the company to be more efficient, to
save costs and to gain more brand awareness.
• Hanes has a very unbalanced ratio of customer
to sales. 62% of their net sales were from only
the top ten of the brand customers. If the
brand lost any of these customers, it would
severely impact the HBI business, operations
and cash flow.
• Though the brand has diversified into various
forms of outerwear, it still depends mainly on
innerwear especially hosiery garments for
most of its revenues.
• The brand has limited penetration in emerging
economies

5. HBI SWOT Analysis
Opportunities and Threats
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Opportunities Threats
• HBI has the opportunity to expand its
product line into many international
markets. It already has a strong customer
relationship in the US and now they can
expand more into the growing India and
Africa markets which have a new market
for brand conscious people.
• HBI has the opportunity to concentrate
more on green campaigns which are a
need in today’s global markets.
• The brand can further diversify into
other product lines by extending its
brand portfolio.
• The high volatility in the apparel market
which leads to minimal brand loyalty is a
concern.
• With many lifestyle brands also entering
the field of innerwear, it poses a serious
threat to the core products of the brand.
• The duplicated products of the brand are
available at cheap rates posing a
significant challenge to the brand.

6. Recommendations:
• First, I will recommend that Hanesbrand.inc should continue expanding in other
emerging economies such like Africa and India.
• HBI should focus more on the COGS because the table above shows that the
competition had an advantage to them in this area. They should increase their
automation which will help them to reduce their labor cost.
• HBI should increase its inventory turnover to get ahead of the competition. They can
do this by spending more on promo budgets and spending more on strategic
planning.
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7. Competitor’s Plan to beat HBI
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• Under Armour should expand its brand to growing economies like Africa and India
and take advantage away from HBI.
• Stick to UA core strategy of athletic apparel and stay away from Hanes strength
of innerwear.
• Focus more on collecting outstanding receivables quickly. UA can do this by
changing the terms of the deals with its customers.

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