What Happened to the Pacific Brands Share Price?
Shares in clothing, linen and footwear maker Pacific Brands Ltd [ASX:PBG] plunged by almost 9% today, dragging the retail sector down with it. Pacific Brands is now retesting the multi-year lows that it fell to in mid-2012.
Why Did This Happen to the Pacific Brands Share Price?
At its interim results in February, Pacific Brands told the market that it would earn $105 million in the year ending 30 June 2014.
This morning the company cut that guidance and admitted that it now expects to achieve earnings before interest, tax and one-off costs of $90–93 million this year.
Pacific Brands is blaming ‘challenging markets, declines in consumer sentiment and a warm autumn’.
The company claims that it has already taken measures to offset the pressure on its earnings, citing performance improvement and cost reduction initiatives.
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But the company that markets well-known Australian brands including Hard Yakka, Bonds, Sheridan, and Berlei is not getting the benefit of the doubt from investors. Bears have clutched this downgrade as an opportunity to sell down Pacific Brands and its listed peers.
What Now For Pacific Brands Ltd?
The market has been aware of the downturn in Australian consumer sentiment for some time now, so it’s disappointing that Pacific Brands has struggled to negotiate the softening trading conditions.
Investors who are exasperated by Pacific Brands initiating yet another strategic review should be aware that we can see more exciting stocks in the Australian retail sector.
Tim Dohrmann+
Small-Cap Analyst, Australian Small-Cap Investigator
