Pac Brands offloads workwear

 

Sale of businessStruggling clothing maker, Pacific Brands, will sell its workwear brands to Wesfarmers after suffering a more than $224 million loss.

Pacific Brands, which makes socks and underwear brand Bonds and Sheridan sheets, made a net loss of $224.5 million for the year to June 30, compared to a $73.8 million profit in 2012/13.

The company has agreed to sell its workwear division, which owns the Hard Yakka, KingGee and Stubbies brands, to Wesfarmers for $180 million.

The company has also promoted its finance chief David Bortolussi to CEO, replacing John Pollaers who left the company in July amid a boardroom battle over the company’s direction.

Meanwhile, Pacific warned market conditions would remain challenging in 2014/15 as competition continues to hurt profit margins.

The company’s full year profit was weighed down by a $241.8 million goodwill writedown to the workwear division and $46.6 million in restructuring costs.

Pacific lifted sales revenue 3.8 per cent to $1.32 billion during the 2013/14, but earnings dropped more than 25 per cent due to lower profit margins and weakness in the workwear division.

Bortolussi said the sale of the workwear brands would allow the company to focus on the performance of Bonds and Sheridan.

“The sale of Workwear simplifies and focuses Pacific Brands group strategy around maximising the potential of our market leading brands such as Bonds and Sheridan,” he said.

“It also reduces exposure to the challenging industrial market, and restores balance sheet strength to the company.”

Pacific will not pay a final dividend to shareholders.

AAP

Comments

2 comments

  1. Matt posted on August 26, 2014

    Lets also mention the employees that are being put through the wringer as the brands struggled to work harmoniously together. With each restructure, good people and invaluable intellectual property were walked out the door. It is not competitors hurting the profit margin. It is the in-house competition amongst the senior executives arguing over which direction the brands should be heading and completely forgetting about putting their staff and their customers first - That is what is hurting the profit margin. Wesfamers, embrace these iconic Australian brands and the wonderful people working within. They are an awesome team and will take any direction set and make it a successful reality. They just need to be given a chance.

  2. Philip Endersbee posted on August 26, 2014

    What a disgrace !!!! This is probably an inevitable outcome when one considers there is not one seasoned textile industry professional on the Board. I can remember they were forewarned at their AGM a few years ago but said they had all the answers !!! They have now pulled the business down to the lowest common denominator and the reason is fairly obvious. They may as well just sell the lot and put their long suffering shareholders out of their misery. Failing that the Directors should just step down. Imagine if Sollie Lew bought this business 5 years ago ??? - would they be where they are today??? - it does make you think about the calibre of those with their hands on the wheel !!! No dividend but keep paying the Directors fees - is this still on ?? I think a few pink slips should be handed out !!!

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