Pacific Brands is forecasting better times ahead for its long-suffering shareholders - but shoppers will soon be paying more for its Bonds underwear and Sheridan bed linen.
The clothing and bedding maker has narrowed its annual losses and expects earnings to rise in the year ahead, with plans to recommence paying dividends fiscal 2016.
The forecasts were welcomed by shareholders, who pushed Pac Brands shares up six cents, or 15.6 per cent, to 44.5 cents.
The stock has been under pressure in the past six years as the company, which also owns the Berlei, Jockey and Rio brands, has suffered heavy losses, shed thousands of jobs, lost two chief executives, and sold off well-known brands including Hard Yakka and Volley shoes.
However while Pac Brands had good news for investors on Tuesday, shoppers were warned that prices on its famous brands will be lifted in order to offset the effects of the weaker Australian dollar.
Chief executive David Bortolussi said the Aussie dollar, which has fallen by more than 20 per cent against the US dollar in the past year, was a major headwind.
"We are targeting price increases of over 10 per cent for most categories," he said.
"Higher prices are likely to be progressively rolled out in our own stores and for our customers (wholesalers) in the second quarter of fiscal 2016."
The price hikes should help the company continue improving its bottom line, with its net loss of $97.7 million for the 12 months to June 30 having narrowed by 57 per cent from 2013/14.
The result was weighed down by $138.5 million in writedowns made during the first six months of the year.
Excluding significant items, net profit rose 5.1 per cent to $37.5 million.
The company expects underlying earnings to increase from the $64.2 million in 2014/15, but gave no specific forecast.
Sales revenue for the year rose 5.4 per cent thanks to growth in Bonds and Sheridan's store sales offsetting lower wholesale sales.
Bonds' comparable store sales rose 20 per cent, while Sheridan lifted 13 per cent.
The company has been opening Bonds and Sheridan bricks-and-mortar stores and increasing its online presence to counter weaker wholesales growth.
Pac Brands said comparable sales for the first eight weeks of the new financial year were eight per cent higher.
However, results for the first half will heavily depend on the key pre-Christmas trading months in November and December.
Meanwhile, Pac Brands expects to start paying dividends in the first half of 2015/16, having last paid out two-cents-a-share to investors in April 2014.
Morningstar analyst Farina Parsons said forecasts for continued earnings growth had pleased investors.
"If they get growth in EBIT, then it will bolster their bottom line because they don't have any debt," she said.
BONDS AND SHERIDAN SALES RISE
* Net loss: $97.7m, up from $224.5m loss
* Sales revenue: up 5.4pct to $789.7m
* Final dividend: nil
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