Pumpkin Patch profits plunge 44pc

Maurice Prendergast, Pumpkin Patch CEO.  Pumpkin Patch AGM, Elleerslie Events Centre.  Photo / Natalie Slade
Maurice Prendergast, Pumpkin Patch CEO. Pumpkin Patch AGM, Elleerslie Events Centre. Photo / Natalie Slade

Children's clothing company Pumpkin Patch reported a 43.5 per cent fall in half year net profit to $8.1 million, as trading conditions continued to be tough.

Revenue for the six months to the end of January fell 10.4 per cent from a year earlier to $173.9m, with the company saying a lacklustre trading environment resulted in lower sales in its key Australian and New Zealand markets.

An interim dividend of 3c per share is to be paid, down from 4.5cps a year before.

Pumpkin Patch chief executive Maurice Prendergast said 2011 was always going to be tough, specially with the retail softness that had developed since early 2010.

The company also had supply chain difficulties and delivery delays early in the season due to supplier factory closures and cost pressures within the supply chain, Prendergast said.

Other challenges were extreme bad weather in Australia and Britain, and a disappointing sale period after Christmas.

"While all markets were characterised by heavy competitor discounting, we were able to maintain store level gross margins which will pay dividends when trading conditions improve," he said.

The level of the NZ dollar also affected earnings, particularly of the Wholesale division which primarily exported to the United States.

Despite the difficult trading conditions, Pumpkin Patch opened 17 stores in the half year in this country, Australia, Britain and its newest retail market, Ireland.

While short-term trading conditions were expected to remain challenging, the company would continue to implement its growth strategy, said Prendergast.

New stand alone brand Charlie & Me now had seven stores, with another four to open by the end of July.

In Australia, sales for the half year fell 14 per cent in NZ dollar terms on a strong first half performance a year earlier, while earnings before interest and tax (ebit) fell 25 per cent to $14.9m. So far this financial year, nine new stores had opened in Australia, taking the total to 128.

In this country sales were down 12 per cent, while ebit fell 24 per cent to $4.7m. Three new stores were opened taking the total to 52.

For the Wholesale and Direct unit, sales were down 6 per cent to $22.5m, with ebit down 22 per cent to $5.3m.

In Britain and Ireland sales grew 5 per cent when measured in sterling but fell 4 per cent in NZ dollar terms, while ebit rose to $100,000 from a loss of $200,000 a year earlier. The addition of five stores took the total to 44.

In the United States, sales rose 8 per cent in US dollars, but was down 3 per cent in NZ dollars, with an ebit loss of $500,000 compared to a loss of $800,000 a year earlier.

- NZPA

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