AUSTRALIA: Pacific Brands divests workwear unit amid FY loss
Pacific Brands has moved to a net loss in its full-year and announced the divestment of its workwear business in a deal worth AUD180m.
The company has entered into an agreement to sell the Pacific Brands Workwear business (Workwear) to Wesfarmers Industrial and Safety (WIS), a division of Wesfarmers Limited on a cash and debt free basis.
In fiscal 2014, the segment reported sales and EBIT (before significant items) of $368.5m and $22.1m, respectively.
CEO David Bortolussi said the sale "simplifies and focuses" group strategy around "maximising the potential" of its leading brands such as Bonds and Sheridan. It also reduces exposure to the "challenging industrial market, and restores balance sheet strength to the company", he said.
Separately, the company revealed it had moved to a net loss of AUD224.5m in the 12 months ended 30 June. This compared to earnings of AUD73.8m a year earlier. This was due to charges from the sale of its Wentworthville property of AUD10.8m.
Gross margin declined by 2.1 percentage points, from 49.1% to 47%, primarily due to increased levels of promotional/clearance activity, a shift in sales mix towards lower margin channels in workwear and higher import costs including lower realised FX rates.
Reported sales, however, increased 3.8% to AUD1.32bn due to growth in underwear and Sheridan Tontine, underpinned by increased direct-to-consumer sales across those businesses and also in footwear.
In addition, Pacific Brands has promoted David Bortolussi, the company's chief financial and operating officer since 2009, had been appointed as the company's CEO, effective immediately.
Peter Bush, who had been performing the role of executive chairman during the selection process, has resumed his role as non-executive chairman.
He said: "As announced in early June, we have been accelerating and expanding performance improvement and cost reduction initiatives and a strategic review is being conducted. David has been leading this review and as CFO and COO has been at the heart of this work."
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