Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Lee Family Built HanesBrands From a One-Room Tobacco Shop
Transcript
- Lucas: Today we're looking at the Lee family and how they built what became HanesBrands — the company behind Hanes underwear, L'eggs pantyhose, Playtex bras, and Champion sweatshirts. It's a story that starts not with textiles, but with tobacco. Luna: Tobacco? How do you go from tobacco to a $6.5 billion apparel company? Lucas: The founding figure is John Wesley Hanes. In the 1870s, he ran a small tobacco shop in Winston-Salem, North Carolina. But he saw that tobacco was becoming commoditized — the real money was in scale. So he and his brother Pleasant built a tobacco manufacturing company called P.H. Hanes Tobacco Company. Luna: So they were successful tobacco guys. What made them switch? Lucas: The pivotal moment came in 1901. John Wesley's son, John Wesley Hanes Jr., was traveling in Europe and saw a seamless knitting machine — a new technology that could produce stockings without side seams. He realized that if he could bring that machine to the U.S. and produce high-quality hosiery at scale, he'd have a massive advantage. Luna: And he actually did it. He convinced his father to invest. Lucas: Exactly. In 1901, they founded the Shamrock Mills — later renamed Hanes Hosiery Mills. The key insight: instead of selling through wholesalers, they would sell directly to retailers. That gave them better margins and more control over brand presentation. Luna: So vertical integration was baked into the model from the start. Lucas: It was. And they took it further. By the 1920s, Hanes owned cotton fields, operated their own spinning mills, ran the knitting factories, and managed distribution. They controlled every step. That meant they could produce a pair of socks for less than competitors who had to buy from middlemen. Luna: And they survived the Great Depression because of that cost advantage? Lucas: Partly. But also because they made a strategic shift. When demand for premium hosiery collapsed in the 1930s, Hanes introduced a cheaper line called 'Winston' — named after the city. They kept their factories running at high volume, which lowered unit costs even further. By the end of the Depression, they had actually gained market share. Luna: So the family kept control through some pretty tough times. When did they start thinking about going public? Lucas: After World War II. The company was growing, but the capital requirements to keep expanding were huge. In 1959, Hanes went public. The family still held a majority of shares, but they brought in outside directors and professional managers. That's when you start to see the classic family-business tension. Luna: The tension between family control and the demands of public shareholders. Lucas: Right. In the 1960s, the CEO was Gordon Hanes, a grandson of the founder. He pushed the company into new categories — men's underwear, women's hosiery — and they acquired the L'eggs brand in 1969. L'eggs was a game-changer: pantyhose sold in plastic egg containers in grocery stores. It was a radical distribution move. Luna: And it worked. By the 1970s, L'eggs was the number-one brand of pantyhose in America. Lucas: But here's where it gets interesting. The L'eggs success created a conflict. The company was now a major player in both men's underwear and women's hosiery, but the family had different opinions on how to allocate capital. Some wanted to double down on hosiery, others on underwear. That disagreement eventually led to the sale of the company. Luna: Wait — the family sold Hanes? Lucas: In 1979, Hanes was acquired by Consolidated Foods, a conglomerate. The family received stock in Consolidated, which later changed its name to Sara Lee. But the Hanes brands kept growing under Sara Lee's ownership. Then in 2006, Sara Lee spun off its apparel business as HanesBrands, a standalone public company. Luna: So the company became independent again, but no longer family-controlled. Lucas: Exactly. Today, HanesBrands is a publicly traded company with about $6.5 billion in revenue. The Lee family still owns some shares — descendants of the founders have seats on the board — but they're not in operational control. The CEO is a professional manager. Luna: And yet the brands — Hanes, Champion, Playtex — they still carry that family legacy. It's interesting to think about how much of that identity is tied to the family versus the product itself. Lucas: That raises a good point. The Hanes brand name is actually the family name. But the company's success today depends on things like supply chain efficiency and cost management — not family tradition. Still, the story of how they built that supply chain is rooted in the family's early decisions. Luna: Speaking of things that are useful — if you're getting value from these deep dives into how families built real businesses, listener support is what keeps this show ad-free and focused. You can buy me a coffee at buy me a coffee dot com slash fexingo. Lucas: Yeah, it's a small way to help us keep doing episodes like this — no ads, no sponsors, just the story. And we really appreciate it. Luna: So back to the Lee family — after the sale, did any family members stay involved in the apparel business? Lucas: A few. Richard Hanes, a great-grandson, served on the board of Sara Lee's apparel division. But by the 1990s, most of the family had moved on to other ventures — real estate, philanthropy, private equity. The last family member to hold an executive role left in 2002. Luna: So the family effectively exited management. But the company they built is still a giant in apparel. What's the lesson for other family businesses? Lucas: I think the big takeaway is that vertical integration gave them a moat that lasted decades. By controlling the entire supply chain, they could underprice competitors while maintaining quality. That's a structural advantage that's hard to replicate. And the family's willingness to adapt — from tobacco to hosiery, from premium to value during the Depression — kept them relevant. Luna: But they also knew when to sell. They didn't cling to control at the expense of the business. Lucas: That's the hard part. They built something valuable, and when the family's interests diverged — some wanted growth, others wanted dividends — they chose to sell rather than fight. That preserved the wealth, even if it meant losing the family identity in the company. Luna: And now HanesBrands is a public company with a family name but no family management. Does that matter to consumers? Lucas: Probably not much. When you buy a pack of Hanes T-shirts, you're buying comfort and price, not a family story. But the story explains how that T-shirt costs $12 instead of $20. The family's early investments in efficiency are baked into the cost structure. Luna: So the legacy lives on in the margin, not the mission statement. Lucas: That's a great way to put it. The Hanes family DNA is in the supply chain, not the boardroom. And that's a pretty durable inheritance.