Pacific Brands has emerged from the dark days when it shredded $1 billion in shareholder value to post its first full-year profit in three years, but has warned of another earnings slide in 2014 due to challenging markets for its workwear division.
The manufacturer, owner of brands such as Bonds, Holeproof, Hard Yakka and Sheridan, on Thursday unveiled a net profit of $73.8 million, up from a loss of $450.7 million in 2012 when a sharp deterioration in its business in the wake of the global financial crisis brought the company face to face with a near-death experience.
The 2012-13 profit was slightly ahead of market expectations and was built upon an earnings turnaround by its underwear division, where nearly 90 per cent of sales are driven by the Bonds brand, corporate contract wins and improvement for its online operations.
Group revenue fell 3.7 per cent to $1.273 billion, with sales at its underwear division up 5 per cent to $453.9 million, while workwear sales were 6.7 per cent weaker at $362.7 million.
Its homewares, footwear and outerwear business reported an 8.9 per cent slide in sales to $456.7 million.
Workwear, which takes in its portfolio of clothes under labels such as King Gee and Hard Yakka, again stumbled due to the general downturn in the economy and fragile business confidence. Earnings before interest and tax (EBIT) for the workwear division reached $37.4 million, from a loss of $16.9 million previously. Underwear performed much better thanks to fresh investment, reporting EBIT of $78.1 million, up from a loss of $330.3 million.
Chief executive John Pollaers, who replaced the long-serving Sue Morphett last year, said the company was on track with his five-year turnaround strategy, but, consistent with an update in June, investors would not see meaningful bottom-line growth for another two years.
An uplift in sales during the second half had not persisted between July and August, with sales lower than for the same time last year, and pre-tax earnings now expected to be lower for fiscal 2014.