Pacific Brands sells unprofitable athletic shoes and clothing
Pacific brands [NZX: PBG], the Australian clothing and linens brand company, split and sold Brands Collective, its unprofitable footwear and sportswear brands, seeing a loss of A $ 30 million on the sale.
The gross proceeds from the sale will be approximately A $ 39 million, compared to the book value of net assets of around A $ 66 million, the Melbourne-based company said in a statement. It expects to recognize the loss of $ 30 million in the June 30, 2015 fiscal year. The sale comes after Pacific Brands, which also owns the Sheridan and Bonds underwear brands, confirmed yesterday that ‘she was in talks to sell the lackluster brands.
The footwear and apparel businesses, which include the Grosby, Julius Marlow and Volley brands, as well as its licensed brands Clarks, Hush Puppies, Mossimo and Superdry, were acquired by Australian private equity firm Anchorage Capital Partners. IBML, a UK-based division of Sports Direct International, has purchased Dunlop and Slazenger, sports brands it already owns outside of Australia and New Zealand, and will also take over the equipment license. Everlast.
Meanwhile, Everlast Equipment has been acquired by Designworks, a division of The PAS Group, which will also license IBM’s Dunlop, Slazenger and Everlast brands.
The Brands Collective division reported a loss of A $ 900,000 on earnings before interest and taxes, as sales fell 7.9% to A $ 204 million in the fiscal year ended June 30.
“The sale of the Brand Collective business is in line with our strategy to simplify and focus Pacific Brands on maximizing the potential of our market leading brands such as Bonds and Sheridan,” said Managing Director David Bortolussi. “While this divestment has been complicated to execute, the transactions are all unconditional and should be finalized within two weeks with minimal disruption to clients and our core business.” From a price point of view, the divestiture represents good value for our shareholders for an unprofitable division. ”
The sale comes after Pacific Brands announced the sale of its workwear unit, which owns the Hard Yakka and King Gee clothing brands, to Wesfarmers after the company’s write-downs resulted in a full-year loss.
Pacific Brands reported an annual loss of A $ 244 million, compared to a profit of A $ 73.8 million a year earlier. The loss was largely due to a non-cash impairment of goodwill and brands in the workwear industry of A $ 241.7 million. Sales for the year rose 3.8% to A $ 1.32 billion.
Excluding write-downs, Pacific Brands’ profit fell 28% to A $ 53 million last year. Australia accounts for 88 percent of sales and New Zealand is the second largest contributor with 7.3 percent.
ASX-listed Pacific Brands shares rose 4% to 51.5 Australian cents and are down 23% this year. It was unchanged at 51 cents on the NZX and is down 27% year-to-date.