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PAS Group earnings fall and sales rise as customer profile shifts

Fashion firm PAS Group has seen positive like-for-like sales improve 1.2 per cent over the first half of FY20, but indicated earnings are likely to almost halve.

Underlying earnings before interest, tax, depreciation and amortisation is expected to land between $3.5 and $4 million, compared to the $6.7 million the group earned in FY2019.

The underlying trading result was broadly in line with the group’s plan, it said in a trading update, though recognised the sales mix had changed largely due to shifts in the wholesale business. 

“There’s a whole different profile to the business,” Chief executive and managing director Eric Morris told Inside Retail.

“We have wholesale, retail, and online, so it just depends on where the profile sits at a particular time. We have so many different moving parts. But, the important part is that this is what we had planned.”

PAS Group holds a number of brands in its stable across several parts of the fashion industry – such as Review, Black Pepper, Jets, White Runway, Yarra Trail, Marco Polo, and Bondi Bather. Across those brands, the group sells across department stores, specialty retailers, and approximately 800 independent stores. 

Morris said the group was pleased with the result considering the continued challenges facing the Australian retail market, while acknowledging the impact the catastrophic bushfires had had on the business and industry at large.

However, Morris stressed the group would remain focussed on maximising areas of the business that remain within its control.

“Despite the continued challenges faced by all Australian retailers, we are pleased to have achieved positive like-for-like sales for the first half across the retail portfolio, reversing the previous negative trend,” Morris said, referring to the 5.5 per cent negative like-for-like sales experienced during 1H19.

Diversification is key

Morris recently told Inside Retail about the advantages and disadvantages of PAS Group’s multi-brand model – with the diversification being both a strength and weakness.

“We’ve had our challenges over the last few years, but we’re still around to tell the story, which is important,” Morris said. “I think from that perspective, diversification has helped us.”

However, the disadvantage lies in the fact the business has a smaller footprint in each sector it operates within. 

“We’ve got divisions that focus on selling tennis racquets, tennis balls, boxing gloves, etcetera, which from a production perspective is very different to apparel production for Review, which is very different from apparel production for Jets,” Morris said. 

“That’s the downside, but the upside is that you’re in a diversified stable and are attracting different markets.”

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