Pacific Brands is set to write down the value of its footwear, outerwear and sport (FOS) segment after the category took a 32.8 per cent dive in sales.
Pacific Brands CEO Sue Morphet revealed the company's total sales for the period ending December 31, 2010 amounted to $852.1 million. This was down 9.5 per cent on the first half of 2009/10.
The company reported a net loss after tax of $166.1 million for the first half of the financial year, a reduction from the company's $22.2 million net profit in the first half of the prior year.
The company's poorest performing category was FOS in which reported sales were down 32.8 per cent to $172.3 million. As a result, Pacific Brands announced a $174.8 million write down of the value of the category.
The company revealed while premium footwear brands Clarks, Hush Puppies, Julius Marlow and Naturalizer had performed well, it was the sport and non-premium brands of Dunlop, Grosby, Slazenger and Volley that were all well down in sales.
“The write-down in relation to the FOS business is obviously disappointing,” Morphet said.
“We expect the FOS business to turn around … However, we do not expect to see improvement in the overall FOS business until some time next year.”
In the underwear and hosiery category, reported sales were down 11.5 per cent to $249.2 million. Pacific Brands explained more than half of the decline was attributable to the discontinuation of non-core brands and labels including Lane Bryant and Playtex.
Strong performing brands in underwear and hosiery were the department store stocked Berlei, Jockey and Razzamatazz, while the discount department store and supermarket channels experienced declines affecting brands such as Bonds, Rio and Holeproof.
Workwear experienced an increase in reported sales of 6.6 per cent to $196.5 million, with increased wholesale orders for labels King Gee and Yakka.
“We have now completed the cost reduction elements of our Pacific Brands 2010 transformation program which are almost fully realised, 12 months ahead of schedule,” Morphet announced.
However the company said earnings in the second half of 2010/11 are likely to be adversely impacted by soft retail conditions, import price increases and the performance of the FOS category.
It expects underlying sales for the second half to be broadly in line with those in the first half. Underlying sales saw a 2.3 per cent decline in the six months to December 31, 2010.