Pac Brands tips upturn
PACIFIC Brands is forecasting better times ahead for its longsuffering shareholders – but shoppers will soon be paying more for its Bonds underwear and Sheridan bed linen.
The clothing and bedding maker has narrowed its annual losses and expects earnings to rise in the year ahead, with plans to recommence paying dividends in fiscal 2016.
The forecasts were wel- comed by shareholders, who pushed Pac Brands shares up 6 , or 15.6 per cent, to 44.5 .
The stock has been under pressure in the past six years as the company, which also owns the Berlei, Jockey and Rio brands, has suffered heavy losses, shed thousands of jobs, lost two chief executives and sold off well-known brands including Hard Yakka and Volley shoes.
But while Pac Brands had good news for investors on Tuesday, shoppers were warned that prices on its famous brands will rise to offset the effects of a weaker Australian dollar.
Chief executive David Bortolussi said the Aussie, which has fallen by more than 20 per cent against the US dollar in the past year, was a major headwind.
“We are targeting price increases of over 10 per cent for most categories,” he said. “Higher prices are likely to be progressively rolled out in our own stores and for our customers (wholesalers) in the second quarter of fiscal 2016.”
The price hikes should help the company continue improving its bottom line. Its net loss of $97.7 million for the 12 months to June 30 narrowed 57 per cent year on year.
The result was weighed down by $138.5 million in writedowns made during the first six months of the year.
Excluding significant items, net profit rose 5.1 per cent to o $37.5 million.
The company expectss underlying earnings to in- crease from the $64.2 million reported for 2014-15 but gave no specific forecast.
Sales revenue for the year rose 5.4 per cent thanks to growth in Bonds and Sheridan’s store sales, offsetting lower wholesale sales. Pac Brands expects to start paying dividends in the first half of the current financial year.