Accounting expert says troubled chain may be worth more broken up.

The woes of one-time market star Pumpkin Patch continue with one accounting professor saying the struggling retailer may now be worth more to shareholders broken up than as a trading whole.

Victoria University emeritus professor of accounting Don Trow told the Herald the company had been in trouble for some time, but this week the company's share price sank beneath its break-up price.

Trow highlighted problems with slow stock turnaround - noting that problems last year with stock failing to arrive for Christmas had been over-compensated for with $73 million in stock accumulated this year and too much in debts leading to a "critically low" 30 per cent equity to total liabilities ratio.

These problems, and others, combined to lead the company to announce at its AGM last month it risked breaching banking covenants with ANZ if Christmas trading was sluggish. Such a breach would give the bank the right to appoint receivers or withdraw banking facilities.

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The company's accounts to July 2014 include warnings from auditors PWC that a possibility this may occur "indicates the existence of a material uncertainty that may cast significant doubt about the company and group's ability to continue as a going concern".

Trow described the arc of Pumpkin Patch as "sad".

"When it first started it was a great story. But they're now very dependent on a friendly bank who have the patience and confidence to allow them time to turn it around," he said.

According to the company's 2014 accounts the net assets of the company per share, if they were sold at book value, was 25c. Yesterday Pumpkin Patch shares closed at 21c.

"The markets are telling us that perhaps this is the end for Pumpkin Patch, and also telling us that when they do break up the assets they aren't even going to get the book value," Trow said.

Pumpkin Patch's well-regarded chief executive, Di Humphries, was unwilling to answer questions this week, with her PA saying she did not want to expand beyond her AGM speech where 2014 was described as "very challenging".

Peter Schuyt was more forthcoming on the challenges faced.

"Is it a role where you wake up in the middle of the night worrying about things? Yep, it certainly is," Schuyt said of his role as company chairman.

Schuyt was unwilling to comment on whether the company's shares were yet at break-up level, but acknowledged the low price was indicative of a company facing challenges.

"You'd have to say the share price is reflecting risk ... [and] it will only move up if there is evidence we're hitting our straps," he said.

Schuyt said the board had a plan to deal with three problems - sluggish internal business operation, tough external competition and undercapitalisation.

"We're all very clear as to the magnitude of the task in front of us, but we're also confident that the execution of the change programme will deliver results," he said.

Goldman Sachs had been appointed to explore the possibility of a capital-raising, and the company was in monthly contact with ANZ.

Improving a stock turnaround time of nine months, compared with the three months of its rivals, was a priority, Schuyt said.

Calculations by Trow showed $45 million, or more than two-thirds, of Pumpkin Patch's debts, could be retired if the children's retailer could match the efficiency of rivals.

Schuyt agreed with this analysis.

"Everyone can read the balance sheet and see our principal asset is stock, we have to do it," he said.

The company, founded in 1990 and floated on the NZX in 2004, has sunk from market darling to the basement in the past few years after a push into the United States and British markets foundered. The failed expansion resulted in dozens of store closures and tens of millions of dollars in impairment costs.

The roller-coaster ride for investors has been especially painful for some. Founder Sally Synnott has carried a 5.6 per cent stake through the peaks and troughs.

At the company's high share price of $4.95 in January 2007, that minority holding was worth more than $40 million. Today that same package of shares is worth less than $3 million.

The ongoing problems led to a wholesale board shake-out in the middle of the year, with Synnott, chairwoman Jane Freeman, and Maurice Prendergast - the chief executive from 1993 to 2011 - all stepping down as directors.

That reshuffle, and others over the past few years, left former MediaWorks chief executive Brent Impey - elected as an independent in 2010 - as the company's longest-serving director.

Despite Humphries insisting at the AGM that Pumpkin Patch's online presence was an avenue for growth, the company's corporate website still lists Freeman and Prendergast as directors.

Several market participants spoken to this week agreed with Trow's analysis of Pumpkin Patch's prognosis, but because of concerns over unfairly tarring the current board and executive as failures said they were unwilling to be named.

"It's really on a life-support system at the moment. Most of us like the board, I think Peter is doing a good job, and we've got a lot of regard for Di," one said.

"We want the company to survive, we don't want it to go under, but it's not in a great position."