Pumpkin Patch, the children's clothing retailer, plans to focus on cost-cutting, reducing bank debt and wringing the most it can out of Christmas while it expects continued difficult trading conditions.
"My main focus right now is ensuring we enter the all important Christmas trading period in the best possible position," incoming chief executive Neil Cowie told the annual shareholders' meeting.
"The common opinion amongst retailers is that the Christmas period will be challenging so, for that reason, my primary focus over the next six weeks is the Christmas trading window and making sure we pull every trick out of the hat to maximise sales opportunities over that period," Cowie said.
Pumpkin Patch is well positioned for when conditions do improve, he said.
The retailer reported a bottom line loss of $1.9 million in the year ended July 31, which included a number of one-off redundancy and other costs, down from a profit of $25.5 million in the previous year.
Pre-tax profit from continuing operations of $20.5 million was just over half the $40.4 million earned the previous year.
Chairperson Jane Freeman said the results were "disappointing" and the company is conducting a complete review of strategy, structure and operations. "We know we must do better."
In a rare move, one of the company's cost-cutting initiatives has been to slash directors' fees.
Freeman said he fee has been reduced to $85,000 a year and the other three non-executive directors' fees to $50,000, an overall reduction of about $130,000 a year or 35 per cent.
Freeman was paid $128,000 in the year ended July 31, up from $85,000 the previous year, which included fees for chairing the remuneration and nominations committees and for chairing the group from November 23 last year.
Directors Brent Impey and Sally Synnott were paid $75,000 in the latest year while David Jackson's $85,000 including fees for chairing the audit, compliance and risk management committee.
One of the company's priorities is to expand its online presence. Online sales have grown more than 40 per cent in the year to date, Cowie said. The company is launching the Patch General Store as part of its online offering which will expand its product range.
"We know our customers want to buy a wider range of products from a name they can trust so we are offering them the opportunity to buy a lot of what mum and dads need to get them started," Cowie said.
Patch General Store will offer a wide range of products from bottles and nappies to travel bags and accessories.
Cowie said four of the US stores have been closed and the remaining stores there will be closed by the end of January. The Pumpkin Patch brand is still sold in about 200 stores, mostly Nordstrom ones, in the US and the company has a database of about 170,000 customers as a result of having its own stores there.
Pumpkin Patch shares are unchanged at 65 cents, just above the 62 cents record low hit earlier this month. The shares have been trending lower since peaking at $4.95 in January 2007.
Freeman said directors don't believe the current share price reflects the value of the underlying business.
"However, the board and the management team are well aware that for the share price to appropriately reflect the true value of the business we must deliver better financial results and increase the confidence of the market in the company," she said.