Pumpkin Patch shares plunge 20pc after sale ditching news

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

Pumpkin Patch shares are tumbling today as investors digest the firm's decision to abandon plans to find a buyer or white knight investor and go it alone.

The stock was down 20 per cent, or 5c, just before 1pm, giving the company a market capitalisation of $33.8 million.

Late on Friday the children's clothing retailer announced it had assessed proposals from possible investors or buyers, but none had offered suitable value to shareholders.

The potential suitors included private equity companies and trade players.

Friday's news followed the company's announcement in March that "certain third parties" had expressed an interest and its board was seeking formal proposals around either an acquisition or re-capitalisation.

That announcement sparked a surge in the firm's languishing stock price.
Chairman Peter Schuyt said on Friday that 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.

Pumpkin Patch shares fell 3.9 per cent to close at 25c on Friday.

Schuyt said the retailer would continue focusing on initiatives such as closing under-performing stores, supply chain improvements and reducing head office costs.
"We weren't prepared to compromise what we believe is the best outcome for all the stakeholders," Schuyt said.

Pumpkin Patch has been struggling to gain traction in a difficult market beset with margin-sapping discounting on both sides of the Tasman, online competition and supply chain challenges.

Pumpkin Patch turned in a loss of $10.2 million for the year to July 31, 2014, from a profit of $5.1 million a year earlier.
It reported a net profit of $749,000 for the six months to January 31 this year, up from $106,000 in the prior period.

Pumpkin Patch had net bank debt of $52.7 million at the end of January.

The stock closed as high as $4.95 in 2007.