Pumpkin Patch ripe with profit promise

A reputation for under-promising and over-delivering will be tested when Pumpkin Patch unveils its annual harvest tomorrow.

The market will also be looking for news about the childrenwear retailer's international expansion when it reports its second profit as a listed company.

Analysts expect the number to be good, with a consensus net profit forecast of between $24 million and $25 million.

The company signalled it would make at least $23 million in the year to July at its half-year result in January.

That compares with a net profit of $8.1 million last year on revenue of $220 million, up 3.2 per cent on forecast and up 13.8 per cent on the previous year.

Pumpkin Patch paid no dividends last year but said it expected to pay 50 per cent of this year's net profit in dividends.

The 11 stores it opened in the first half were expected to be fully operational during the past six months.

Fund manager Anthony Halls at BT Funds Management said he would be interested to see how the retailer had traded over the unseasonably warm winter season, whether it had winter stock left over, and if it was shifting it to the northern hemisphere.

"But the key will be how their international growth is going - how well they are hitting their straps in the wholesale division and how well their UK roll-out is going."

An update of how it was going in the United States - with the first Pumpkin Patch store in the US expected to start trading last month - will also be eagerly awaited.

In April the retailer said it would make its first direct foray into the American market, where its clothes have already had good success in department stores.

Pumpkin Patch chief executive Greg Muir has been quick to highlight the company's cautious approach to the US market, where it will be head to head with stiff competition from the likes of GapKids, Gymboree and The Children's Place.

Muir is expected to give an update on US progress tomorrow but has previously said he expected the stores to be loss-making in their first year and that it would be at least that long before the company could say whether further expansion in the US was warranted.

The cautious approach echoes the company's slow expansion in the UK, where it had 13 stores in January and was looking to open two more by year's end.

It took the company more than four years to move beyond the trial stages in that market.

Shares in the company have been climbing steadily over the past few weeks to close at $3.40 on Friday.

This compares with its listing price of $1.25 in June last year.

Retail will remain the focus of the market later in the week, with clothing retailer Postie Plus due to report its annual result on Friday.