On Tuesday, Sara Lee Corp. completed the spinoff of Hanesbrands, its apparel unit. Today the new company, with Hanes, Wonderbra and Champion brands under its belt, begins trading on the New York Stock Exchange under the HBI ticker.

The transaction ends the biggest restructuring in Sara Lee’s 67- year history. In 18 months, the company sold off six units that had accounted for 40 percent of its revenues. It raised more than $3.9 billion, including $2.4 billion from Hanesbrands.

In the tax-free spinoff, investors as of Aug. 18 received one share of Hanesbrands for every eight shares of Sara Lee they own. Hanesbrands, based in Winston-Salem, N.C., sells lingerie, underwear and clothing to Wal-Mart Stores Inc., Target Corp. and other retailers. The division had $4.49 billion in sales for the year ending July 1, compared with $4.68 billion a year earlier.

Hanesbrands is challenged by a very competitive market. Its brands, including Bali, L’eggs and Playtex, can’t perform well in a market increasingly filled with Asian-manufactured garments carrying the lower prices Wal-Mart and Target shoppers covet, analysts say.

“They’re in the middle of a very big fight right now. Off-shore Asian-produced undergarments are their biggest competitors right now,” said Gregg Warren, an equity analyst at Morningstar Inc. “They have not been able to compete effectively.”
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Competitor Fruit of the Loom went into bankruptcy before being purchased by Warren Buffet’s Berkshire Hathaway, for example.

“These guys are caught at the lower end of the spectrum,” Warren said.

“It’s more for everyday, basic people, and they’re going to shop on price. That eliminates any major benefit you get from a brand.”

About 30 percent of Hanesbrands sales are at Wal-Mart.

Target accounts for 11 percent of its sales.

Its large scale is a plus in keeping costs in check — its brands claim the No. 1 or No. 2 market share in eight areas — but Hanesbrands still will shift more of its work force to Asia, CEO Rich Noll said.

cjackson@suntimes.com

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THE THINNER SARA LEE

The Chicago-based firm is slimming down to focus on its food, beverage, and household and body care businesses.

What’s gone:

(Divestitures since February 2005)

Direct selling: Sold to Tupperware Corp. for $557 million.

U.S. retail coffee: Sold to Segafredo Zanetti Group for $82.5 million.

European-branded apparel: Sold to Sun Capital Partners affiliate for $117 million.

European meats: Sold to Smithfield Foods Inc. for $614 million.

European nuts and snacks: Sold to PepsiCo Inc. for $152 million.

Sara Lee Branded Apparel (Brands include Bali, Just My Size, Hanes, Hanes Her Way, L’eggs, Playtex, Wonderbra, Champion): Spun off for $2.4 billion.