Pacific Brands says sales are down

23 Oct 2012, 3:50 pm   -   Source: AAP

Pacific Brands boss John Pollaers says it is too early to tell if the clothing and homewares supplier will do better this year, compared to last year.

Pacific Brands has delivered a fairly negative near-term outlook for the retail sector and can't say yet if its financial results will improve upon last year's.

But the clothing and homewares supplier has escaped a shareholder backlash on its remuneration report.

Pacific Brands said on Tuesday that underlying sales have been down so far this financial year and the company was not expecting a significant improvement in the operating environment.

Pacific Brands, which owns brands including Bonds, Rio and Sheridan, posted a $451 million loss in the 2011/12 financial year due to the cost of a restructure and writedowns on some of its businesses.

Pacific Brands chief executive John Pollaers, a former head of brewer Foster's who has been at the helm of Pacific Brands since September 3, said there were opportunities ahead to lift investment in its brands, expand its markets, and develop online and social media sales channels.

But the retail environment was going to remain challenging for the next 12 months.

"With a bit of luck, the interest rate cuts that came through will start to have some impact but we won't really have a clear view until the key Christmas trading period is over, and that's obviously about to start," Mr Pollaers told reporters after the company's annual general meeting (AGM) in Melbourne.

Mr Pollaers said it was still too early for him to say if Pacific Brands would make more writedowns on its businesses or require further restructuring.

"But my sense is the company is in much better shape as a consequence of the decisions that it's taken over the last five years," he said.

Mr Pollaers said the focus for the company now had to be on "top line (sales)" growth, building relationships with customers and establishing its direct retail operations.

Mr Pollaers earlier told shareholders that trading in September was down but trading so far in October was in line with last year.

Shareholders at this year's AGM were fairly muted, with a representative from the Australian Shareholders' Association a lone voice in asking when Pacific Brands would see good times again.

Pacific Brands chairman Peter Bush said the company had undergone much restructuring and had made changes to its board and management.

He said the company would be "fit and ready" for a turnaround in the retail environment.

Pacific Brands' remuneration report did not attract a single question from shareholders.

The company easily escaped a so-called "second strike" on the adoption by shareholders of its remuneration report.

Almost 98 per cent of proxies were voted in favour of adopting the remuneration report.

At last year's annual general meeting, 53 per cent of shareholders voted against adoption of the report.

Mr Bush said that since the "first strike" last year, the Pacific Brands board had addressed the negative shareholder feedback in relation to the remuneration report.

Mr Bush said the board had held back on making incentive payments to employees because financial targets had not been met.

The board had also assessed pay scales for 2013 taking into account the company's reduced size and market capitalisation, and the ongoing difficult trading conditions.

Directors' fees had been cut and a salary freeze imposed upon senior management.

Shares in Pacific Brands were 2.25 cents, or 4.05 per cent, lower at 53.25 at 1504 AEDT on Tuesday.

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