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Peter Lynch

L'eggs/Hanes
NYSE:HBI
1969-1979
Industry: Clothing Manufacturer
Category: Product Innovation

Context
L'eggs are women's stockings that are packaged in small colourful eggs.
They are placed near the cash register, near the gum and chocolate bars.

Why the Company is Mispriced
A new product not anticipated/understood by the market.

Alternative View
Lynch's wife Carolyn discovered L'eggs when she went out grocery shopping.
Hanes was test marketing L'eggs at several sites, including suburban Boston where Carolyn shopped
Hanes interviewed hundreds of women if they had bought a pantyhose, a high percentage said yes. Most could not name the brand.
Hanes was ecstatic. If a product can become a best-seller without name recognition, imagine how it will sell once it gets a reputation.
Carolyn realized L'egg was a superior product. The stocks were good quality, less likely to run compared to normal stockings.
The main attraction was convenience. Instead of visiting a department store, which women visit once every 6 weeks,
they can buy it in the grocery store next to the gum which they visit twice a week on average.
Lynch did the research on L'eggs and Hanes, and recommended it to his portfolio manager.

Result
One of 2 most profitable new products of the 1970s. It was a 6x before it got acquired by Consolidated Foods, a 18% CAGR.
Lynch was convinced it was a 50x.

Notably
The other successful product of the 1970s was Pampers.
However, Pampers was only a small contribution for P&G, so it's success was not as meaningful.