Pumpkin Patch sees itself through worst of global recession

Pumpkin Patch chief executive Maurice Prendergast. File Photo.

Children's clothing retailer Pumpkin Patch believes it is through the worst of the global recession and is seeing the return of some stability.

Chief executive Maurice Prendergast told the company's annual meeting today that its Australian operations were seeing early signs of improved trading conditions.

That improvement was expected to continue across 2010, with most of the impact in the second half of the financial year, said Prendergast.

New store locations were being assessed across Australia, taking advantage of opportunities in softer retail environments.

Pumpkin Patch believed it would be able to secure 30 to 40 new store sites in the next three to four years, he said.

"These sites will be on average smaller than our existing stores as many of the new stores will be located in sub-regional malls that suit a smaller format store.

"However, the economics of these smaller stores will make them good incremental earners," Prendergast said.

In this country, retail conditions remained subdued but a slow and steady improvement being predicted through 2010 should translate into improved sales performances in the second half of the 2010 financial year.

Despite expectations that a soft economic environment was expected to continue in Britain throughout 2010, the company expected an improvement in that market in the coming year.

Pumpkin Patch was in the process of confirming up to three new stores in Britain for this year, as the environment created opportunities, Prendergast said.

A reorganised store network in the United States was expected to have a significant positive impact on total group earnings and cash flows in 2010.

Despite that, trading in the US remained unpredictable with no immediate signs of recovery being seen.

Wholesale customers were lowering orders in 2010 as they dealt with challenging conditions in their home markets, said Prendergast.

Pumpkin Patch was in the final stages of negotiations on wholesale agreements for China, Jordan and Lebanon.

"While the Chinese market is obviously the largest and most exciting market, like all wholesale initiatives it will start out small and take some time before it contributes any noticeable earnings," he said.

For the 2009 financial year, to the end of July, the company reported a full year net profit, excluding non-recurring items, down 13.9 per cent to $14.7 million.

It reported extreme volatility in the US continuing to have an impact on group earnings across 2009, with a US store reorganisation plan leading to impairments and other non-recurring costs of $39.9m being recognised during the year.

Today Prendergast said that, as usual, Pumpkin Patch would not be providing full year's earnings guidance at the annual meeting, as it was far too early in the year to do so.

Adding to that was ongoing uncertainty in all the company's markets and ongoing volatile exchange rates.

Pumpkin Patch shares were unchanged at $1.81 around mid-afternoon, having ranged between $2.02 and 78c in the past year.

- NZPA