Lower footfall at Myer stores takes toll on Pas Group
Apparel firm Pas Group has reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.4 million for its first-half, with the result sitting at the upper end of the company’s guidance range of $8.0m-$8.5m.
After posting sales for the half of $131.4 million, the owner of brands including Review and Jets swimwear said a decline in like-for-like (LFL) sales was brought about by challenging trading conditions in the current retail environment, “particularly for the first 8 weeks of the half year and over the Christmas period”.
The decline was also attributed to reduced concession sales and lower foot traffic at Myer department stores during the period.
Online sales were up 25.5 per cent on top of the 41.0 per cent growth achieved in FY17;
Pas said there were positive sales and earnings growth from new stores which included expansion into eight David Jones concessions and annualised stores opened in FY2017;
The company’s wholesale division saw sales decline 7.1 per cent due to the discontinuation of $5.1m of low margin sales in Designworks, order delays for department store customers and a reduction in independent wholesale sales.
“The retail apparel segment continues to face unprecedented challenges due to both cyclical and structural changes,” said Eric Morris, chief executive officer of Pas.
“Despite the trading environment, Pas remains debt free, has a strong balance sheet and continues to evaluate potential strategic opportunities whilst maintaining a tight focus on cost control.”
Total retail sales grew 0.4 per cent to $72.3 million while LFL sales across the business were negative ‘due to ongoing subdued consumer sentiment, industry wide traffic headwinds and the elevated promotional environment.’
New online sales channels added during the half included David Jones Dropship for Review and The Iconic Marketplace for JETS.
Pas said a key strategic focus for the company is its online business, after the recent launches of Review onto Alibaba’s Tmall platform and an Australian Everlast website.
The company expects to launch on Amazon in the third quarter of the current financial year.
Pas has also secured a ‘significant supply contract with Coles supermarkets for their Coles Mix program.’ The initial deliveries of this program will commence in July 2018 with the total program expected to deliver $15-$20m p.a. in incremental sales across FY2019/FY2020.
“Trading conditions for the first six weeks of H2 FY2018 continue to be tough; however, the business is well advanced in the development of plans to drive further efficiencies,” said Morris.
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