AUSTRALIA: Pacific Brands first-half losses deepen
Australia's Pacific Brands has seen its first-half losses deepen and said that the outlook for the remainder of the year remains "challenging".
The company today (17 February) said net losses more than doubled to A$362.4m from a loss of $166.1m in the same period of the previous year. Sales fell 19.6% over the period to $684.7m.
The company attributed the losses to non-cash write-down of goodwill in the in the underwear business of $388.7m relating to its IPO in 2004 combined with restructuring costs of $13.4m relating to its transformation programme.
CEO Sue Morphet also put its performance down to "difficult trading conditions" and the "Kmart transition" following the retailer's delisting of Pacific Brands' products last year.
"We have partially mitigated the impact of the increase in the cotton price on margins and managed our cost base, while maintaining strong cash flow," she said.
"The write-down of goodwill in the underwear business is disappointing, but a necessary step to reflect the impact of trading conditions and other factors on the business' performance and outlook".
Morphet said that price increases helped to mitigate the impact of higher input costs, although gross margins fell by 2.7 percentage points.
Following an approach by KKR in January, the company said it has received other enquiries, which it is also considering, but stressed there is "no certainty that any agreement will be reached with any party".
Pacific Brands said it expects second half EBIT and net profit to be "materially down", and that underlying sales are also expected to be down due to the "continuing weak retail conditions".
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