KEY POINTS:
Pumpkin Patch is dismissing the threat from rivals who are on the expansion trail in the company's key Australian and New Zealand markets.
Citigroup has warned that the launch of more stores by New Zealand company JK Kids Gear and Australian firm Cotton On Kids could threaten Pumpkin
Patch's share of the children's clothing market - 20 per cent in this country and 11 per cent in Australia. The two countries contribute three-quarters of Pumpkin Patch's operating profit.
But executive chairman Greg Muir said JK Kids Gear is just a small player and Cotton On Kids is trading in a different part of the market.
JK Kids Gear - 50 per cent owned by retailer EziBuy and 50 per cent by Sproat family interests - recently expanded to Australia, where it has eight stores.
Cotton On Kids has launched 56 stores since 2005 and plans another 40 across both countries in the next two to three years, analysts say.
But Muir said: "We do not really see JK Kids as a competitor. We barely run up against them," Cotton on Kids focused more on basic clothing rather than children's fashion, he said.
Pumpkin Patch dominates the children's brand market in Australia with 117 outlets and also faces competition from discounters such as Target, owned by Australian retailer Coles.
"Target is a discount retailer with a fashion element and they are a major competitor," Muir said.
Retail sector analysts at Citigroup in Sydney recently changed their recommendation for Pumpkin Patch from "sell" to a "hold" after a slide in the share price from $4.33 on May 10 to $3.19 on July 4.
The fall has come as the value of the Kiwi dollar has soared, cutting into Pumpkin Patch's overseas profits.
Pumpkin Patch stocks have rebounded over the past week and closed yesterday at $3.42, buoyed by upbeat expectations about prospects for its expansion into the US.
But Citigroup warned competitors are expanding faster than Pumpkin Patch.
Forsyth Barr Auckland retail analyst Guy Hallwright said that Citigroup had tended to have a conservative view on Pumpkin Patch which Forsyth Barr valued in the "mid-four dollars".
Citigroup repeated its past reservations and warned of "headwinds in the domestic markets" of Australia and New Zealand from competitors .
JK Kids Gear managing director Ben Sproat said the company was in the early stages of expansion, but he saw JK Kids Gear as competing with Pumpkin Patch.
"Time will determine to what extent we are a threat," he said.
JK Kids Gear is also involved in a joint venture for seven outlets in South Africa with an unnamed partner.
