Troubled Australian clothing maker Pacific Brands is in the midst of a multi-year transformation programme that has now claimed its CEO, Sue Morphet, who announced plans to step down as the group saw full-year losses widen. With former Foster's boss John Pollaers set to take the helm, just-style considers the challenges facing the company.

Over the past three years, Pacific Brands has taken a number of steps to try to turn around its struggling business.

The company, which markets brands including Berlei, Clarks, Dunlop, Everlast, Hush Puppies and Slazenger, has cut the number of brands in its portfolio from 300 to a core of around 40 key labels, closed 11 manufacturing sites and engaged in a significant debt reduction plan.

The decision to close the "uncompetitive" domestic manufacturing sites will save the company $60m a year, says Morphet.

However, full year net losses have continued to widen, reaching AUD450.7m in the year to June, from a loss of AUD131.9m the year before.

The losses were blamed on $502.7m in goodwill write-downs, including $114m in the second half, relating to homewares and workwear. Sales fell 18% over the year to $1.3bn. Excluding the loss of a contract with retailer Kmart, sales fell 4.3%.

Pacific Brands says it continues to be buffeted by the lagged impact of last year's record cotton prices. Even though cotton prices have since fallen, company CFO and COO David Bortolussi says prices charged by suppliers in China has not fallen by the same extent.

"We are also facing pressure from Chinese labour rates, which are increasing by 15-20% or more depending on the province", he adds.

These factors have meant that despite the disposal of a number of businesses that contributed low levels of profit, gross margin fell two percentage points to 46.8%.

Over the year, the company has also faced significant challenges in workwear after sales fell 2%, impacted by lower business confidence, a slowdown in the resource sector and reduced government spending.

Morphet says market conditions "remain challenging" and she expects this will remain the case throughout the 2013 financial year.

Indeed, there was little news in the group's full-year analyst call to suggest that the road ahead for Pollaer will be any easier to navigate than Morphet's. Indeed, year-to-date underlying sales are already marginally down on the prior year.

Morphet says the group is continuing efforts to reduce the ongoing costs of doing business, and that earnings will largely depend on "market conditions and associated sales performance, and may be impacted by ongoing restructuring and rationalisation".

For some shareholders, the offer to take over the company by private equity firm KKR earlier this year was a missed opportunity - and one chairman Peter Bush says he does not expect to come again.

Indeed, Bush emphasises that the appointment of a new CEO means the company is focused on trying to turn around its business from within.