David is the business writer for the Bay of Plenty Times and Rotorua Daily Post.

UPDATE: Pumpkin Patch's BOP outlets spared for now

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The Rotorua store. PHOTO/STEPHEN PARKER
The Rotorua store. PHOTO/STEPHEN PARKER

Troubled children's wear retailer Pumpkin Patch's three Bay of Plenty stores have been spared in the latest round of closures announced by receivers KordaMentha.

But the Bay of Plenty shops' future remains in doubt after seven store closings elsewhere in New Zealand affecting 57 jobs were announced this afternoon. KordaMentha receiver Brendon Gibson confirmed more store closings could be expected.

"We've announced there is a programme of store closings in place that they had on before our appointment," said Mr Gibson. "We've been open that we are looking to accelerate that to try and make the business more saleable and improve its performance. That's ongoing."

However, a key concern was to ensure all affected staff were informed before any public announcements, he said.

Pumpkin Patch has stores in Fraser Cove and Bayfair, in Tauranga, and in Tutanekai St in Rotorua.

The managers of all three stores said they had been advised by their head office they were not allowed to comment to the media on anything concerning the company.

Mr Gibson said that KordaMentha was now trying to assess whether there was interest in Pumpkin Patch as a going concern.

"We've re-established contact with people who have previously expressed an interest and gone to other people who we think might have an interest," he said.

Chris Wilkinson, managing director of First Retail Group, said any buyer for the company would need "a dramatically pared down" store network. A buyer was likely to be only interested in the brand and intellectual property, rather than the store network, he said, adding the chain could be potentially of interest to the likes of Australian retailer David Jones or New Zealand's Farmers.

The impact of the receivership was likely to be seen in the next few weeks, he said.

"A number of the stores will close. They will have been bound in the past by lease commitments etc, but now the company is in receivership, landlords will realise it's a bit of a no-win situation."

The company has about 600 employees across 43 stores in New Zealand, and 1000 staff in 117 stores in Australia.

Mr Wilkinson emphasised that it was difficult to know at this stage which stores might survive.

"Potentially there will be some pockets of performance in some areas where there could be a really thriving store," he said.

"They have typically traded well in the townships and done really well in the provincial areas. All we know is that when they do disappear, it will be a big loss for many of the high streets around New Zealand and the town centres."

Mike Steiner, spokesman for Rotorua's Inner City Focus Group, said for any retailer to close was a blow to the community.

"It does illustrate the vulnerability of retailing in today's climate," he said. "We would be very sorry to see them go in Rotorua because they are a niche market and a speciality store."

Rotorua Chamber of Commerce chief executive Darrin Walsh said when any business went into receivership, voluntary or not, it was of concern.

"There are people and there are jobs that are at risk. It's very sad news."

Tauranga Chamber of Commerce chief executive Stan Gregec said he hoped a new buyer could be found for the iconic Kiwi brand.

"It's a sign of how quickly market conditions can change and you can get caught out if you're not moving with it," said Mr Gregec.

"Pumpkin Patch has been in trouble for some time, so the latest news is not entirely a surprise. But with two stores in Tauranga, it will come as a real blow to staff and customers alike if they have to close."

Pumpkin Patch was placed in voluntary administration and receivership on Wednesday, with its shares having fallen to 0.06 cents, from a peak in 2007 of $4.85 per share or more than $800 million in market capitalisation.

The company had bank debt of $46 million for the year to July 2016, up from $39.1 million the previous year.

First Retail Group's Chris Wilkinson said Pumpkin Patch had been undone by a combination of long-term bad debt from its ambitious international expansion a decade ago, and the significant changes in the retail sector in recent years.

"They were still very much dealing with the legacy of the debt they accrued when they went into the US and UK markets," he said.

The chain was "a bit of market darling then," he said, and was among the first to introduce an experiental retail model, with atmospheric themed shops. "In their heyday they were way ahead of their time in terms of that model."

However, said Mr Wilkinson, Pumpkin Patch was now faced with competitive pressures from both online sales, as well as fast fashion retailers such as Cotton On, which turned over new products very rapidly, in weeks rather than seasonally.

"For traditional retailers that has become a real challenge," he said.

"And then their market has been cannibalised by products having a second life in the economy. Kids tend to grow out of clothes before they wear them out. In the old days, you could only recycle them at bring and buy sales. Now if you go on Trademe.com, you'll find pages of second-hand Pumpkin Patch products and the like."

The other issue was that globally, the children's wear sector had been under intense pressure, he said.

"Pumpkin Patch have done well to hold on for so long. The reality is the likelihood of a recovery position for them was getting increasingly far away."

- Bay of Plenty Times

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