Manufacturer Pacific Brands – home to brands such as Bonds, Sheridan, Dunlop and Hard Yakka – will slash 1850 jobs, close seven factories, slash costs and dump many of its brands after posting a loss of $150 million for the six months to 31 December.
The company, which has debts of around $800 million, has used its half-yearly results announcement to unveil a massive restructure.
It will close seven clothing manufacturing sties over the next 18 months, with 1200 workers to be sacked. Another 650 non-manufacturing jobs will go, mainly from the company’s Melbourne headquarters. The cuts represent just over 20% of the company’s entire workforce.
The company, which operates more than 200 separate brands, is also planning to sell or close a number of its smaller brands after a strategic review of the company found many of its brands were unviable.
“Our top 20 brands provide us with almost two thirds of our sales – but we have a long tail, with more than 200 brands accounting for just 2%,” chief executive Sue Morphet says.
While the company has not specified the brands on the chopping block, the company’s sporting goods division (which includes names such as Slazenger, Malvern Star bicycles, Rosebank helmets and Maxfli golf products) has been seen as a problem area for some years.
The company’s home comfort division (home to bedding products such as Sheridan, Sleepmaker and Tontine) also had a poor half and is likely to be under scrutiny.
Pacific Brands has written down the value of its brands by more than $200 million.
Morphet expects to generate $150 million in savings over the next three years by closing its Australian manufacturing operations and sourcing product from overseas, selling properties and consolidating office space where appropriate.
Morphet says the company has not made the decision to axe so many staff lightly.
“Ultimately this is the correct course of action for the future strength of the business and the remaining employees.”
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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