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Clothing company Pacific Brands has unveiled a $219 million first half loss.
AAP Clothing company Pacific Brands has unveiled a $219 million first half loss.

The maker of Bonds underwear is looking to hike prices by as much as 10 per cent to offset a slide in the Australian dollar.

Pacific Brands chief executive John Pollaers revealed the plans to increase prices across its labels on Tuesday after the company reported a $219 million loss for the six months to December 31.

He said the declining Australian dollar, which pushes up the cost of products produced overseas, would be the major headwind for the company over the next couple of years.

Pacific Brands is currently negotiating with retailers to lift its prices, and he said further rises were likely over the next few years as the Australian dollar continued to drift lower.

"At the moment we are putting through price increases in the order of five to 10 per cent to make sure we are moving with the currency change," he said.

"Frankly, I think the business and the industry will need to get used to the notion of annual price increases for the next couple of years to make sure we fully address this."

The Australian dollar has fallen by around 15 US cents in the past year to its current level of about 90 US cents, and has also fallen against other currencies.

Pacific Brands' bottom line was dragged into the red in the first half of the 2013/14 financial year by writedowns on its workwear division, which includes Hard Yakka and King Gee, because of weaker demand from the resources and manufacturing sectors.

Its Brand Collective division, which includes the Mossimo and Hush Puppies labels, also weighed on the result, due to weaker sales and restructuring costs.

Investors punished the company, pushing its shares down 6.5 cents, or nine per cent, to 65.5 cents.

The writedowns overshadowed the strong performance of its Bonds business, which helped Pacific Brands achieve its first positive sales result in five years.

Total sales were up 2.7 per cent to $656 million over the half and Mr Pollaers expects the positive momentum to continue over the full year.

In addition to Bonds, Pacific Brands' labels include Berlei, Jockey and Sheridan.

Mr Pollaers said the company was working to overhaul the Workwear division by reducing costs and target more profitable products and market segments.

The company had also made the decision to exit labels like Diesel and Stussy.

"Clearly the decline in the workwear result is extremely disappointing and we are tackling it," he said.