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Is Target making the right move in dumping C9 Champion?

Written by Tom Ryan

Source: Target

C9 Champion has cemented itself as Target’s go-to activewear staple since being launched in 2004, while expanding to a wide range of items including sports bras, footwear, socks and exercise equipment. Yet by July 2020, C9 will be off Target’s selling floors.

On Wednesday, HanesBrands, the parent of Champion, revealed Target will phase out the sub-brand when the latest contract expires in January 2020. C9 accounted for $380 million in sales for HanesBrands last year.

Last summer, Target announced plans to exit some of major house brands including Merona and Mossimo while launching more than dozen exclusive brands for apparel and décor as part of a multi-year overhaul. The C9 exit appears to follow that strategy.

A Target spokeswoman told CNBC the discounter will roll out "a new portfolio of performance brands soon."

On HanesBrand’s second-quarter conference call with analysts, Gerald Evans, HanesBrands’ CEO, agreed that C9 has begun to “mature” at Target. He said, “As businesses do, they do mature over time, and this one has certainly begun to mature. There’s fantastic product out there, but it has begun to mature.”

But Target ended the relationship, not HanesBrands. HanesBrand’s shares tumbled 19 percent Wednesday on the news.

C9 was among the primary brands that rode the athleisure craze and is often touted as the affordable alternative to Lululemon, Nike and others in the category.

The brand is also reputed for its quality given its value. Target’s customers may need to build trust in any new activewear line where moisture-management, stretch properties and other functional attributes are critical.

The move further surprised many because the Champion brand is among the hottest in the fashion scene amid a strong '90s revival. Sales grew 18 percent in the second quarter.

HanesBrands’ officials said Champion is being positioned as more of a global brand with growth across multiple channels and they re-committed to a goal for Champion’s sales to reach more than $2 billion by 2022 despite Target’s exit. Said Mr. Evans, “There's a lot of momentum building and we feel great about the potential for Champion in the years ahead.”

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