Pacific Brands is on track to restart paying dividends

Pat Rafter and Iggy Azalea pose with models during Bonds 100th birthday celebration event in Sydney. Brendon Thorne/Getty Images

Clothing group Pacific Brands, which started the 2016 financial year with good sales of its underwear and bedding, is on track to start paying dividends again.

The company, which has been simplifying its range under the Bonds and Sheriden brands, says sales for the first 16 weeks of the year are up 7%.

Shareholders were told at the company’s annual general meeting today that the board of directors intends to restart dividends for the first half results. The target pay out ratio is at least 50%.

CEO David Bortolussi says the new Bonds stores are performing well, not just in underwear but in the unisex fashion category.

Pacific Brands opened 18 Bonds stores and 3 Sheridan stores last year and expects to open around another 20 stores this year.

“Pacific Brands is now a very different business: much higher quality and substantially simplified, with greater growth potential and a strong balance sheet,” says Bortolussi.

“We’re off to a good start this year and I’m confident that we have the right strategy to deliver earnings growth and dividends in F16 and beyond.”

The company has been narrowing its losses. In August, it posted a 5.4% rise in full year sales to $789.7 million. The loss was $97.7 million compared to a loss of $224.5 the year before.

Pacific Bands shares are down 0.7% to $0.705.