History Works
For Hanes
. . . as Tiir Heel hosiery ami knitwear
firms unite, go publie and big board.
(Investor's Reader)
Back in 1X72 brothers John W. and
Pleasant H. Hanes pooled time, talent
and finances to form P. H. Hanes &
Company, a plug tobacco manufac¬
turer in North Carolina's central Pied¬
mont. After 28 years of prosperous
business, the founders sold out to
R. J. Reynolds Tobacco and entered
the consumer apparel business. Only
this time each man went his own way.
John Hanes formed Shamrock Ho¬
siery Mills in 1901 to make men’s hose.
In 1914 the name was shifted to Hanes
Hosiery Mills. Four years later the
company fashioned its first pair of
women's hosiery which quickly became
its dominant business. Meanwhile
Pleasant took his sons P. Huber and
Will as partners and organized P. H.
Hanes Knitting Company to produce
men's heavyweight underwear. For 64
years after, each company grew — but
separately.
Throughout the long years of
independent development, however,
thoughts of reuniting the family inter¬
ests were never quite forgotten. John's
grandson. Ciordon Hanes, remarks "the
family had always dreamed of a mer¬
ger." Finally in late December 1964.
the managements of the two companies
announced merger discussions were
underway.
"About this time." explains Gordon
Hanes, "both companies had reached
a good size and each wanted continued
growth. So the time was ripe. We recog¬
nized our growth would be greatly
helped by the organization of a com¬
pany whose size, diversification and
potential Big Board status would fa¬
cilitate public financing."
Actual arrangements took surpris¬
ingly little time. Says (Jordon Hanes:
"The terms of the merger, including
such technicalities as the basis for the
exchange of stock, were agreed upon
in two hours." The companies were of¬
ficially merged on February 26, 1965
under the title Hanes Corp. with head¬
quarters in their native Winston-Salem.
Gordon Hanes, president of Hanes
Hosiery Mills since 1958, assumed the
chairmanship of the new company.
Uniting the separate companies cre¬
ated few difficulties for the manage¬
ment. Chairman Hanes states: "We
anticipated a lot of problems but in
general everything went well. One big
issue was many employes were afraid
the merger would abolish their jobs
and for the first year everyone said
4ve* and 'they.' But actually the mer¬
ger provided better jobs. It's all 'we'
now.”
One of the largest headaches was
integrating the different benefit pro¬
grams. While most of this is past his¬
tory, Gordon Hanes says further work
on the pension plans is still needed.
The merger brought new financial
records. Sales last year climbed to a
record SI 13,500.000, up 10 per cent
over the combined 1964 totals, while
profits improved 14 per cent to $8.-
990,000 or S2.28 a share vs. a pro
forma $2 for 1964.
This year sales and earnings for both
the second quarter and the first half
of 1966 were at new highs. Sales for
the half rose 1 1 per cent to $50,400,-
000 on which Hanes earned 89c a
share vs. 81c. Gordon Hanes observes:
"It's important to remember the first
half figures are not indicative of an¬
nual results, since the larger portion
of our company's sales and earnings
are usually recorded in the last half of
the year." For the full year, he fore¬
sees increases of about 10 per cent in
both sales and profits, lifting earnings
to the $2.50 a share range.
Hike I.ikcly
The chairman says Hanes tradi¬
tionally has paid out about 40 per cent
of earnings and expects to continue
this dividend policy. With current pay¬
ments 22'Ac quarterly (raised from
20c last November), the policy makes
another moderate dividend hike seem
likely provided earnings continue to
increase.
Before the merger. Hanes Hosiery
slock was in private hands and there
was "no substantial public market" for
Hanes Knitting, though some Knitting
quotations have been reported, rang¬
ing from 15 in I960 to 37 in 1964.
The merged corporation truly went
public this March when selling stock¬
holders offered 650.000 shares at
$29.75. The families of Gordon Hanes
and Huber Hanes (the Hanes Knitting
side) still control around 31 per cent
of the 3,900.000 shares now outstand¬
ing. The stock arrived on the Big Board
in May.
Demand for Expansion
The high level of retail demand
taxed the merged company's facilities.
(Jordon Hanes believes consumer de¬
mand will remain strong for the rest of
1966 and 1967 with the company's
expanded capacity helping to case the
pressure. Three new plants in the
knitwear division arc now fully pro¬
ductive. Sandhurst Mills, a 1965 ad¬
dition to the hosiery division, was
quickly enlarged this Summer by 5,-
600 square feet (II per cent). The
( Continued on page 18)
HANES TRIBUTE
Upon publication of the Hanes story in Investor's Reader, a perceptive
subscriber wrote the following letter, which was subsequently published
with the Editor's Note:
New York City
Gentlemen:
The reason for this letter h sour October 26 article about the llancs Corpora¬
tion • * * I fail to find any mention of James Gordon llancs, Sr., the father of the
current chainnan of the board of the merged corporation. Gordon llancs.
I think everyone would agree that the current growth and position of the llancs
Hosiery Company is due to James Hanes. Sr. • • •.
In passing, I might point out that the sons of John W. Hanes. Sr., have probably
contributed more to the development of North Carolina in these past fifty years
than any other family that I can think of.
Very truly yours,
STANLEY B. ADAMS
Thanks to reader Adams for drawing attention to the distinguished career
of James Gordon Hanes. Sr., who entered the family hosiery business in
1909. was chairman of Hanes Hosiery from 1938 until he retired in 1954.
He remained a director until the Hanes Hosicry-P. H. Hanes Knitting
merger last year. Now XO, he still takes an active interest in the company
and maintains an office at Winston-Salem headquarters. — Ed.
l □
THE STATE. DCCCMBCR IS. 1966
