• First half net profit reached A$38.9m against a $362.4m net loss last year
  • Sales fell 6.6% to $639.2m
  • Underwear recorded "encouraging" sales growth

Australian clothing company Pacific Brands swung to a first half net profit despite seeing sales decline over the period.

The company, which owns the Bonds underwear brand, recorded an A$38.9m (US$40.1m) net profit for the quarter ended 31 December, against a $362.4m loss in the same period of the prior year. However, sales fell 6.6% to $639.2m.

The company said that underwear showed encouraging sales growth over the period, driven by the Bonds, Berlei and Jockey brands, while workwear has been impacted by a "cyclical downturn in market conditions".

In its homewares, footwear and outerwear division, premium footwear recorded a rise in sales, while Sheridan homeware was marginally down, with a turnaround in the other brands in this division currently under way.

"There is still plenty of work to be done to stabilise sales performance and return the business to sustainable growth," said CEO John Pollaers.

"It is early days, but we are encouraged that the underwear group returned to growth in the period, with Bonds, Berlei and Jockey all up. It shows that good results can be obtained from strategic focus, discipline and investment in great brands.

"The workwear group remains a global leader in an attractive industry. While it is clearly not immune to the current cyclical downturn characterised by low business confidence and slow employment growth, it has generally maintained market share and it has opportunity ahead of it when we see a return of business confidence in its markets."

Looking ahead, the company said that underlying sales performance to date continues to be mixed, with underwear up and workwear down, while homewear, footwear and outerwear and the group overall are marginally down compared to the prior year period.

Gross margins and the cost of doing business are expected to be broadly in line with the first half, while continuing with planned investment in  direct-to-consumer channels.

"Earnings outcomes will be largely dependent upon market conditions, associated sales performance and implementation of the new strategy over time, and may be impacted by ongoing restructuring and rationalisation," the company said.