Pacific Brands cuts FY guidance

Retailer expects full-year profit will be weighed down by weakened consumer sentiment.

Pacific Brands (PBG) has cut its full year guidance to between $90 million and $93m before significant items as the combination of challenging market conditions and declines in consumer sentiment weigh on the retailer.

Investors responded poorly to the news. At 10.25am (AEST), Pacific Brands shares were 9.38% weaker at 50.75c, against a benchmark index lift of 0.48%.

The new target represents a cut of up to 14% from the $105m earnings estimate given during its interim results. 

In addition to warm weather, reduced consumer sentiment and market conditions, the retailer said higher working capital and capital expenditure, along with additional restructuring costs, will lead to an increased net debt of between $250m and $260m by the end of fiscal 2014.

A one-off restructuring cost of between $25m to $30m (before tax) is expected for the six months ending June 30 as the company takes action to mitigate earnings pressure.  

A strategic review has been initiated with the appointment of Macquarie Capital, which will provide an update on progress with the company's full year results on August 26.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles