Pacific Brands Limited (PBG) announced it would introduce a number of prudent capital management initiatives. This included cutting its first half dividend to 3c and a similar amount for the remainder of the year to June 30.

The company said that maintaining a full year dividend of 17c per share was not appropriate in the current environment and retail conditions.

"Given increased uncertainty, the board has determined that it is in the best interests of shareholders to preserve capital and repay debt," the company said.

Pacific also said it would underwrite the dividend reinvestment plan for at least the next two dividends to continue driving the restructure of the company's operations, improving the efficiency of the business.

CEO Sue Morphet said the board's decision to make changes to dividend policy and introducing an underwriting of the DRP was a prudent and pragmatic response to the continuing decline in market conditions.

At 1014 AEDT, shares in Pacific Brands were down 1c to 57.5c.