Pumpkin Patch fails to find buyer

Pumpkin Patch says earnings for the 2016 year will be "significantly' below that forecast for 2015. Photo / NZ Herald

Children's clothing retailer Pumpkin Patch has canned plans to find a buyer for the struggling business and says it will continue focusing on "performance improvement initiatives" that offer greater value to shareholders.

In March the company said "certain third parties" had expressed an interest in the firm and its board was seeking formal proposals around either an acquisition or re-capitalisation.

The announcement sparked a surge in the firm's stock price, which has been languishing on the back of poor financial results.

Today, chairman Peter Schuyt said the process of seeking proposals had been completed.

"The outcome is that the board intends to continue focusing on its performance improvement initiatives, which it believes can deliver greater value to shareholders over the medium-term than any alternative presently available," Schuyt said.

"The company, and its advisors, held discussions with a number of interested parties but these did not result in any proposals being received that, in the board's opinion, represent satisfactory outcomes for the company."

He confirmed previous guidance for normalised earnings before interest, tax, depreciation and amortisation (ebitda) to be in the order of $14.0 million in the year to July 31.

"Targeted reductions in the level of debt and inventory are also expected to be achieved," Schuyt added. "Nonetheless, market conditions are expected to remain challenging and earnings may be volatile going forward."

Pumpkin Patch has been struggling with margin-sapping discounting on both sides of the Tasman, online competition and supply chain challenges.

Its shares, which have shed 45 per cent over the past year, recently traded at 26c, giving the company a market capitalisation of $44 million.