The "underwear indicator" might be signaling strength for the economy.
When Alan Greenspan was an economic consultant in the 1970s, he reportedly looked at men's underwear sales as an indicator for the economy. The thinking was that underwear sales are steady in times of economic growth and that sales fall when the economy slips.
Judging by the recent earnings reports of Hanesbrands, the country's biggest manufacturer of branded underwear, and L Brands, the economy may be in good shape, Eric McWhinnie of Cheat Sheet writes in USA Today.
Hanes reported that operating profit soared 23 percent to $217 million in the quarter ended Sept. 27. And net sales climbed 17 percent to $1.4 billion.
At L Brands, which owns Victoria's Secret, PINK, Bath & Body Works, La Senza, and Henri Bendel, net sales gained 7 percent for the quarter ended Nov. 1, to $2.32 billion.
Morningstar analyst Bridget Weishaar is bullish on Hanes. The company has "advantages that are difficult for competitors to replicate," she writes on Morningstar.com.
That includes "the firm's large owned and controlled supply chain, core product positioning in a space where brand is more important than price and economies of scale achieved through a growing portfolio of synergistic brands."
Weishaar's colleague Jaime Katz has good things to say about L Brands, citing its "brand strength and leading market share position" on Morningstar.com.
"The company's ability to connect with its core audience across its Victoria's Secret and Bath and Body Works brands has made L Brands the frontrunner in lingerie and home fragrance," she writes.
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