…You’re in the Outsourcing Business!
Quit Acting Like A
Broker…You’re in the
Outsourcing Business!
John Englert
Kevin Hughes, SIOR, Colliers Corporate Solutions
Kevin Dollhopf, Hanesbrands
October 27, 2006
2006 Fall Professional Conference – Charlotte, NC USA

…You’re in the Outsourcing Business!

…You’re in the Outsourcing Business!
H b I  America’s best known apparel brands

…You’re in the Outsourcing Business!
Hanes  A Category Leader
Total Apparel Market HbI Categories
1 Old Navy
2 Hanes
3 Gap
4 Polo/RL
5 Victoria's Secret
6 Levi's
Sales
$5,806
$4,684
$4,453
$3,953
$3,480
$2,901
Share
3.1%
2.5%
2.4%
2.1%
1.8%
1.5%
7 Liz Claiborne
8 Nike
$2,588 1.4%
$2,578 1.4%
9 Fruit of the Loom $2,482 1.3%
1
0 Abercrombie & Fitch $2,313 1.2%
1
1 Faded Glory $2,167 1.1%
1 Hanes
2 Victoria's Secret
3 Fruit of the Loom
4 Old Navy
5 Nike
6 Gap
7 Adidas
8 Disney
9 Abercrombie & Fitch
10 Calvin Klein
11 American Eagle Outfitters
Sales Share
$3,869 7.3%
$2,599 4.9%
$2,195 4.2%
$1,578 3.0%
$1,063 2.0%
$1,027 1.9%
$922 1.8%
$880 1.7%
$668 1.3%
$543 1.0%
$533 1.0%
Source: NPD Consumer Panel Track, Rolling 12 months ending June 2006

…You’re in the Outsourcing Business!
Current Production Facility Locations
United States
C. Am / Caribbean
India
China
145 Facilities
17MM SF

…You’re in the Outsourcing Business!
C A N A D A
35 Facilities
7MM SF
Legend
Size < 100k Ft 2
Size between 100k and 400 k Ft 2
Size > 400k Ft 2
M E X I C O
Cholom a
SIOR October 27, 2006

…You’re in the Outsourcing Business!
CANADA
USA
Winston-Salem
Latin America
S. AMERICA
AFRICA
EUROPE
Istanbul
ASIA
PACIFIC
Shanghai
Hong Kong
Bangalore
20 Facilities
2MM SF AUSTRALIA
SIOR October 27, 2006

…You’re in the Outsourcing Business!
250 Facilities
1.2MM SF
SIOR October 27, 2006

…You’re in the Outsourcing Business!
Sara Lee
Casualwear
Champion
Products, Inc.
Printables
2
Sara Lee
Hosiery
1 3 International
9
4
Sara Lee
Sock Co.
8
7
6
Sara Lee Intimate
Apparel
SIOR October 27, 2006
Sara Lee
Direct
5
Sara Lee
Underwear

…You’re in the Outsourcing Business!
HbI Real Estate Mandate:
Design and execute a real estate function expert in driving corporate strategies through the land, building, and infrastructure asset base

…You’re in the Outsourcing Business!
Organization Chart
CEO
CFO COO
Actg .
Fin Legal Adin H/R
Sales Mktg .

…You’re in the Outsourcing Business!
Operating Model
Admin
FIN
Other
HR IT
Legal CRE
Govt.
Affairs

…You’re in the Outsourcing Business!
FIN
HR IT
CRE

…You’re in the Outsourcing Business!
Workplace Solutions
IT

…You’re in the Outsourcing Business!
CRE
SP
SP
SP

…You’re in the Outsourcing Business!
“More and more people working in and for organizations will actually be on the payroll of an independent outside contractor.
Businesses, hospitals, schools, governments, labor unions – all kinds of organizations, large and small – are increasingly
“unbundling” clerical, maintenance and support work.”
By Peter F. Drucker
“Sell The Mailroom”
The Wall Street Journal
July 25, 1989

…You’re in the Outsourcing Business!
Companies are no longer just outsourcing.
Today, they are building global corporate ecosystems linking people, processes, and technologies across the traditional boundaries of the business.
Outsourcing Professionals take the lead in working with senior management to set policy, identify opportunities, execute, govern, and assure quality results.

…You’re in the Outsourcing Business!

…You’re in the Outsourcing Business!
Strategy + Execution = Opportunity!
1) Drive growth: category and share
2) Improve cost competitiveness
3) Increase reliability and consistency
4) Optimize asset efficiency
5) Organize for success

…You’re in the Outsourcing Business!
Six Competitive Strengths
- Strong brands and leading market positions
- Focus on manufacturing/selling high- volume core essentials
- Significant operating scale
- Strong customer relationships
- Strong, consistent cash flow
- Experienced management team

…You’re in the Outsourcing Business!
CRE 2000
IDRC 1996
Corporate Real Estate Function …
• Too tactical, not strategic
• Financial metrics absent
• Minimal cost controls
• Poor alignment with business units

…You’re in the Outsourcing Business!
5 Years Later …
• Focus on cost management
• Outsourcing
• Role Confusion
Alignment out of whack!
10 Years Later …
REEB Alignment Survey
POOR!

…You’re in the Outsourcing Business!
Real Estate: A Business Process-Driven Function
Strategy
CRM
Performance
Management
Acquisitions /
Dispositions

…You’re in the Outsourcing Business!
RE Expense: Client ’ s Value is Space Driven
Disciplined sourcing and aggregated buying will lead to increased savings
RE
Expense =
50%-75%
Space
30%-15% 20%-10%
+ Services + Labor
Strategic business insight, improved RE processes and better analytics will lead to less and better utilized space
Collaborative solutions and variable resources will lead to lower fixed staff costs

…You’re in the Outsourcing Business!
Value Proposition: Outcome Based Performance
Reduce
Total Cost of
Real Estate,
Relentless
Execution
Strategic
Impact
.1X
Direct
Cost
Responsive,
Enable Change,
Flexibility, and
Commitment To
Quality
Speed To Market,
Efficient Process,
Customer Service
Focus: Move the conversation from a discussion around “Direct Cost “ to a discussion about “Total Enterprise Value” creation.

…You’re in the Outsourcing Business!
…you are an expert with experiential knowledge of:
• Real estate markets
• Real estate transactions
• Real estate negotiation
• Real estate finance and investment theory
• Real estate valuation
• Real estate contracts
• Real estate best in class practices
SIOR October 27, 2006

…You’re in the Outsourcing Business!
10) Provide intelligence about my industry, competitors, and company
9) Don’t call if you just read it in the newspaper
8) Be prepared to work with other outsourced providers, and probably your competitors
7) Know and understand the implications of SOX
6) Your company is as dysfunctional as mine: know the operating model, business it does with me, and be honest about capabilities

…You’re in the Outsourcing Business!
5) Be an expert, but help me find other expertise
4) Know the boundary of business and legal advice
3) Benchmark and provide metrics, performance indicators
2) Corporate services = real estate staff.
Act accordingly and be responsive.
1) Always act with the highest ethical standards