• FY loss of AUD97.7m versus AUD224.5m
  • Sales up 5.4% to AUD789.7m
  • Gross margins down 0.8 percentage points

Australian apparel group Pacific Brands has said it will develop a sustainable, lean global supply chain and mitigate the impact of foreign exchange on its margins after narrowing its full-year loss.

The company plans to reduce product and logistics costs, improve development and manufacturing lead times, increase forecast accuracy and service levels, and enhance sustainability and ethical trading outcomes.

It comes after the group's net loss amounted to AUD97.7m (US$70.8m) for the year to 30 June, compared to a loss of AUD224.5m in the same period of the prior year.

This was largely due to first-half non-cash impairments of goodwill, brand names and plant and equipment, driven by a change in the definition of cash generating units, adverse changes in foreign exchange rates and market dynamics.

Sales increased 5.4% to AUD789.7m from AUD749.2m a year ago, with underwear sales rising 4% to $508.6m. The Bonds brand saw sales grow 13%. Total retail was up 44.5%, while wholesale sales fell 5.7%.

Sheridan sales increased 12.8% to $191.3m, with the retail channel up 19.4%, while wholesale was down 3.2%.

Overall gross margin declined by 0.8 percentage points to 49.3%, as a result of a decline in underwear wholesale gross margins and the adverse impact of foreign exchange, product costs and price increases.

“We are gaining traction against our two key challenges,” CEO David Bortolussi said. “Significant efforts are underway to mitigate issues in certain wholesale channels and we are firmly focused on partnering with our customers to drive growth in our categories.

“Currency depreciation has continued to be a challenge for the industry as a whole, but we have plans in place to mitigate the dollar impact on margins through a range of cost reduction and pricing measures.”