Hanesbrands, Carter's top Citi's small/mid-cap apparel list

Top pick: Hanesbrands (HBI) - "We are constructive on HBI’s margin expanding, deleveraging, and cash flow story. Now that we are beyond the high cotton costs, we expect margins to expand from higher selling prices, Gear synergies, supply chain savings, and lower costs."

Runner Up: Carter’s (CRI) "Our positive view is driven by our expectation for: 1) mid-single digit top-line growth over the next several years (~retail expansion, international, e-commerce); 2) EBIT margin expansion (~supply chain restructuring, mix shift to higher margin retail, e-Commerce, international) driving double-digit EPS growth; and 3) company’s commitment to return cash to shareholders. In the near-term, CRI gross margins will be impacted by higher labor costs, but still expect margins to expand from mix improvement (ecommerce)."

Firm has Buy rating on HBI and CRI, as well as Children's Place (PLCE), and Neutral rating on Columbia Sportswear (COLM), Gildan Activewear (GIL), and Iconix Brand Group (ICON).

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