Fiscal year 2014 was a year of investment and transition for Australia-based Pacific Brands, operator of a 10-brand roster that includes Bonds and Sheridan and the licensee of household names like Clarks and Hush Puppies. However, at the company’s 2014 annual general meeting Tuesday, chairman Peter Bush said the company still has some way to go. During his address, Bush told shareholders that the company is now focused on adopting a more balanced growth and disciplined cost agenda.
The company suffered a loss of $224 million during the 2013/2014 fiscal year, as competition damaged profit margins and consumer confidence in Australia declined. In June, the company announced a strategic review of the business, which resulted in the decision to shed its workwear business to Wesfarmers for $180 million. Most recently, rumors have been swirling that Pacific Brands intends on selling its heritage tennis footwear brand Volley and Grosby shoes, both a part of the Brand Collective division, as a means to simplify business, cut costs and improve returns to shareholders.
The Brand Collective segment lost $1 million last year on sales. It is reported to be worth $20 million. The Sydney Morning Herald said the sale of Brand Collective, combined with the workwear sales, could reduce Pacific Brands’ debt to approximately $55 million from $249 million in 2014.
Bush said reduced earnings, higher working capital and capital expenditure, acquisitions and additional restructuring costs led to an increase in net debt. He added, “We will continue to invest in key brands and drive cost reduction initiatives to mitigate earnings pressure. We are moving to a more decentralized organization model which provides business units with more end-to-end accountability for performance and helping restore balance sheet strength.”