What is Happening to the Share Price of Pacific Brands Ltd?

What does Pacific Brands Ltd do?

Pacific Brands Ltd [ASX:PBG] produce and retail the Bonds and Berlei range of underwear, Sheridan sheets, Tontine pillows, Holeproof socks, and Razzamatazz stockings, among other brands. Many consumers identify with these iconic brand names.

What’s happening to the PBG share price?

The share price is moving into an uptrend. One factor, which is improving revenues, has been the company’s foray into the retail sector. At one time, Pacific Brands was solely a wholesaler. The company is now rolling out new Bonds and Sheridan stores. This is growing company earnings. In-store and online sales now account for 32% and 7% of total group sales respectively.

This means the company is now less reliant on wholesaling to big discount retailers like Big W and Target. In this channel, Pacific is forced to compete with the generic underwear brands from these retailers.

The company released their half-year 2016 results on 16 February. Earnings were up nearly 15%, with net profit after tax up 44%. Sales and earnings were up across every operating group.

The company has even returned to paying dividends.

What now for PBG shares?

As mentioned, this company has undergone a significant restructure in recent years, with its move into retail. The good news is that the move appears to be paying off.

The company has offloaded non-performing parts of the business, focusing on the core brands, like Bonds, Berlei and Sheridan.

Since the positive half-year results, the share price has continued to climb higher. It also continued to rise following the ex-dividend date — another bullish sign. There may be more good news to come for this company, but we’ll have to wait and see.

Of course, you’d get a much better idea of that if you could read a chart. If you want to know how to start reading the economy, and individual companies within it, through the charts, click here to find out more.

Terence Duffy,
Research Analyst, Cycles, Trends and Forecasts

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Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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