Change ahead as PacBrands unveils big plans for its smalls
Pacific Brands boss John Pollaers has committed to only modest net sales and earnings growth after 2015 and for the struggling clothing and footwear manufacturer to hit its full potential another two years after that as part of a five-year turnaround strategy.
Holding a briefing for analysts on the company's underwear division, which owns brands such as Bonds, Berlei and which generates about a third of PacBrands' annual sales, Mr Pollaers said he would explore overseas expansion opportunities that could one day have its underwear sold from London to Beijing. But that will take time.
"The imperative is to explore the potential for geographic expansion. People have to understand that it's part of our five-year plan, but it's likely to have an impact in the back end of that five-year plan.
"From a brand potential some of them are ready now, but if you take the underwear business you have to consider the logistics of supporting it, the size of the range, the international labelling - so there is a job to be done on the background."
Mr Pollaers told analysts the company would likely at best stabilise its earnings and halt its downward profit trajectory in the next year or two, and then record modest sales and earnings growth. The business would expand in the final two years of the five-year plan to post respectable growth.
Backing this up would be a pivot away from a reliance on the domestic market, which accounts for 95 per cent of sales, as well as its exposure to the wholesale market.
Mr Pollaers plans to force through a structural change that will see a 50/50 split for sales across wholesale and retail, down from 65 per cent of sales which go through wholesale channels.
Mr Pollaers took over from former PacBrands boss Sue Morphett last September after the company unveiled its third loss in four years after more than $500 million in write-offs and restructuring charges. He took the reins promising a restructure of the group after a downturn in its markets and the sting of a high dollar had Pacific Brands post a full-year loss of $450.7 million for 2011-12.
Last financial year the underwear division posted a 15.8 per cent drop in reported sales to $432.5 million and a full-year loss of $330.3 million.