It was a good fix by management. Dump all the non contributing brands and turn them into a pile of cash. The result is a company making similar profits, but now with no debt, so low risk. Then this pile of cash can now be invested into the best brands. Capital is now flowing to where it will receive the greatest return. Sounds simple, but hard work, so the management need to be commended.
Retailers have been going down the home brands strategy over the last 5 years, which PBG have countered by opening its own stores, however this cycle will turn, it always does, you can see Myer now starting to move back to brands, they need to, or customers will stop shopping there. This will present further opportunities/upside for PBG.
Definitely a takeover target, as most of the hard work has been done, it's got no debt, a large retail footprint and growth upside. There are no obvious buyers, but who knows?
PBG Price at posting:
78.5¢ Sentiment: Buy Disclosure: Held
