Pacific Brands recovered to a full-year profit from a prior year loss as the clothing and shoe manufacturer said underlying revenue and earnings were likely to improve this year.
Net profit was $52.7 million for the 12 months to June 30 compared with a loss of $234.5 million in the prior corresponding period, Melbourne-based Pacific Brands said in a statement today.
Revenue rose 11 per cent to $1.74 billion.
Pacific brands said the uncertain economic environment and challenging retail conditions made it difficult to predict future earnings.
"Earnings are expected to benefit from the impact of off-shore sourcing and improved foreign exchange rates which are largely hedged, but will be impacted by increasing product costs, temporary supply constraints and increases in the cost of doing business," the company said.
"Underlying sales performance is expected to improve in financial 2011, however reported sales growth will continue to be impacted by past divestments and ongoing brand discontinuations."
The company said it wouldn't pay a dividend for the year, but would resume payments from the first half of 2010-11.
Underlying sales were down $102 million, or 5.9 per cent, while reported sales fell by $217 million, or 11.1 per cent in 2009-10.
The company said more than half the drop in reported sales was due to business divestments and exits - its footwear business in the UK and China, Icon Clothing and Merrell - and ending the use of some brands and labels as part of the portfolio rationalisation strategy.
‘‘As indicated to the market at the half-year results, second half earnings were up but the full-year result was down on last year,’’ Pacific Brands chief executive Sue Morphet said in a statement today.
‘‘We are pleased that margins -- both gross margins and EBITA margins -- held steady despite the continuing difficult market conditions and adverse impact of currency.’’
Ms Morphet said strong cash flow allowed the company to reduce net debt over 18 months by $498 million to $313 million at June 2010.
‘‘This, together with our confidence in the future performance of the business, means that the board expects to resume dividends following the first half 2011 result, subject to performance, financial position and outlook at the time,’’ she said.
AAP