Pacific Brands returns to profit and paying dividends in an underwear-led recovery

Models in the window of Selfridges’s in London to launch Bonds. hris Jackson/Getty Images

Pacific Brands has returned to profit and paying dividends, helped by strong sales of its Bonds underwear and Sheridan sheets.

The December half-year profit was $24.3 million, compared to a $108.7 million loss in the same six months the year before, on a 8.6% increase in sales to $425.3 million.

A short time ago, its shares were up almost 9% to $0.85.

Sales growth was growth driven by rises across all brands, the result of restructuring to cut the number of products and to focus more on retailing its own wares rather than being a 100% wholesaler.

Total sales of Bonds grew 6.3% to $268.7 million, Sheridan 10.2% to $105.0 million, and Tontine and Dunlop Flooring by 18.1% to $51.7 million.

A fully franked dividend of 1.6 cents per share was declared.

The half-year results in detail:

CEO David Bortolussi said the strategy focusing on a higher quality, simplified business with greater growth potential and a strong balance sheet was working.

“At our full year results and AGM, I said that F15 marked a turning point in the sales and earnings trajectory of Pacific Brands and I am pleased that our 1H16 results have demonstrated it,” says Bortolussi.

Sales in the first six weeks of the second half were up 8% but results for the six months will largely be dependent on May and June trading.

Bortolussi expects EBIT (earnings before interest and taxes) of $73 million to $75 million in the full year.

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