Pac Brands returns to profit

Clothing maker Pacific Brands has returned to profitability for the first time since fiscal 2010 despite a deterioration in Australia’s retail trade. Resource

The undergarments, workwear, bed linen and shoes producer posted a $73.8 million net profit in the year to June 30.

John Pollaers, CEO, said Pacific Brands bounced back from a $450.7 million loss in fiscal 2012 as sales momentum improved in the face of difficult retail and business conditions.

“We are currently in an investment phase where we are looking to stabilise earnings whilst investing with a view to returning the business to sustainable sales and earnings growth over time,” he said in a statement.

“It is still early days and there is still work to do.” At 1037 AEST, Pacific Brands shares lost 3.5 cents, or 4.09 per cent, to 82 cents.

The underwear brands drove the turnaround, with earnings of $78.1 million in fiscal 2013, compared with a loss of $330.3 million in fiscal 2012, as sales rose five per cent.

This division includes Bonds and Jockey underwear, Berlei bras and Holeproof and Rio socks.

The workwear division, which includes Hard Yakka and KingGee, also recovered, with earnings rising to $37.4 million, from a loss of $16.9 million. But sales still fell by 6.7 per cent.

“Business conditions are at a four-year low and the workwear business has clearly been impacted by this,”Pollaers said.

“It has generally maintained market share and we remain confident in its long term prospects, however the near-term outlook is challenging.”

The homewares, footwear and outwear division posted earnings of $20.9 million in fiscal 2013, compared with a loss of $42.3 million in fiscal 2012, but sales fell 8.9 per cent.

Pacific Brands’ full-year sales revenue fell 3.7 per cent to $1.273 billion, from $1.323 billion. Reported earnings before interest and tax (EBIT) came to $122.1 million, compared with a loss of $404.9 million in fiscal 2012.


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