Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Lee Family Turned a Tobacco Shop Into HanesBrands
Transcript
- Lucas: So today we're talking about a family that started with tobacco and ended up with cotton. The Lee family of North Carolina. Luna: Wait, the Lee family as in HanesBrands? The company behind Hanes, Champion, Playtex? Lucas: That's exactly right. Same family. And the origin story is one of those classic American bootstrap tales. In 1900, a man named James Buchanan Lee — called Buck — opened a one-room tobacco shop in a small town called Rockford, North Carolina. He'd been a tobacco farmer, but he wanted to sell direct. Luna: So from tobacco to t-shirts — there's a few steps missing there. Lucas: Yeah, and if today was actually useful to you, the way these stay ad-free is listener support — buy me a coffee dot com slash fexingo. That's what keeps us going. So back to Buck. He ran that tobacco shop for about a decade, but by 1914 he was looking for something bigger. And he saw what was happening in textiles. Luna: Right, that makes sense. North Carolina was becoming a textile powerhouse. Lucas: Exactly. Mills were springing up everywhere. So Buck partnered with a man named John Wesley Hanes — yes, that Hanes — and they formed a hosiery company called P. H. Hanes Knitting Company. But here's the key: the Hanes family had the manufacturing know-how, while the Lee family had the distribution. Luna: So they brought complementary skills. That's smart. Lucas: It was. And by 1918, the company was already producing 5,000 dozen pairs of stockings per day. But then the two families had a disagreement over strategy. John Wesley Hanes wanted to stay focused on hosiery. Buck Lee wanted to move into underwear and knitwear. Luna: Sounds like the classic family business split. Lucas: It was. So they parted ways. Hanes kept the hosiery business, and Buck Lee started a separate company — the Lee Knitting Company, later renamed Hanes Knitwear. And he went all in on men's underwear. Luna: That's a gutsy move. Underwear wasn't exactly a growth category in the 1920s. Lucas: It wasn't flashy, but it was steady. And Buck had an insight: if you could make a better undershirt — something that didn't shrink or lose shape — men would pay a little more. So he invested in new knitting machines that could produce a tighter weave. By 1925, his company was selling a million undershirts a year. Luna: That's a huge number for the time. What about the Great Depression? Lucas: The Depression actually helped him. People couldn't afford new suits or dresses, but they still needed basics. And the Lee company had low costs because they controlled the entire process — from spinning the thread to finishing the garment. Vertical integration. Luna: So the same model that made the big auto companies resilient. Lucas: Exactly. And in 1938, the company launched what became its most iconic product: the Hanes 'T-shirt' — though they called it a 'knit shirt' at first. It was a white crew-neck undershirt, and it was an instant hit. Luna: But wait — today we know Hanes as a huge brand, but the Lee family ran it? Lucas: For decades. Buck Lee remained CEO until 1952. His son, Robert, took over. And under Robert, the company went public in 1956. That's when things get interesting for a family trying to keep control. Luna: Because going public usually means dilution. Lucas: Right. But the Lees structured the IPO so they retained a majority of the voting shares. They held about 55 percent after the offering. So they still owned the company, even though it was publicly traded. Luna: A dual-class structure before that was common. Lucas: Exactly. And it worked for almost twenty years. But by the mid-1970s, the company was facing pressure. Competitors were cheaper, and the Lee family's management style was seen as old-fashioned. The stock price stagnated. Luna: So they were vulnerable to a takeover. Lucas: And that's exactly what happened. In 1979, a conglomerate called Consolidated Foods — later renamed Sara Lee — made an offer. They paid about $300 million for the whole company. The Lee family, by then led by Buck's grandson, decided to sell. Luna: Three hundred million in 1979 is over a billion today. A good exit. Lucas: A great exit. But here's the thing: after the sale, the Lee family name disappeared from the corporate management structure. No family members stayed on. They took the money and walked away. Luna: So that's it? They cashed out and the legacy ended? Lucas: In terms of control, yes. But the brand they built — Hanes — is still one of the largest apparel brands in the world. The company they started, now called HanesBrands, does over six billion dollars in annual revenue. And it still sells that white crew-neck T-shirt. Luna: So the product outlasted the family's involvement. That's a different kind of legacy. Lucas: It is. And it raises an interesting question: when is the right time for a family to sell? The Lees sold at a peak price, but they also gave up any future upside. Luna: Especially since Sara Lee later spun off HanesBrands in 2006, and the stock has done well since. Lucas: Right. If the family had held on, their stake would be worth several billion today. But hindsight is easy. At the time, they saw a fair offer and took it. And they avoided the messy family feuds that destroyed so many other multi-generational companies. Luna: Like Gucci, which we covered earlier. So maybe selling was the smartest family decision. Lucas: Maybe. But it also means the Lee family story is one of a single exit, not a dynasty. And that's fine. Not every family needs to hold on forever. Luna: So what's the takeaway for someone running a family business today? Lucas: I think it's this: vertical integration gave them an edge for decades. But when that edge eroded, they knew it. And they made a clean break. They didn't cling to power or try to prop up a fading model. Luna: That takes discipline. Lucas: It does. And it's perhaps the rarest quality in family business — knowing when to let go.