The deadline for Pumpkin Patch to give its bank possible solutions to its financial woes has been extended but the clothing retailer has warned that its shares are "highly unlikley" to have any value.
The Kiwi company, which was founded in 1990, has faced difficulties, closing stores and cancelling expansion plans amid shrinking margins.
This culminated in a trading halt yesterday, before which shares were trading at 6c each.
First Retail Group managing director Chris Wilkinson said the childrenswear sector had struggled, with Pumpkin Patch one of several casualties.
"I guess it's been a while coming," Wilkinson said. "They've been working away at trimming their store portfolio and I think we really feel for them because it's basically gone from hero to zero," he said.
"This segment in itself has been incredibly challenging so we've seen that over a period of time, this category has just been hit time and time again."
Pumpkin Patch has a current market valuation of just $10.1 million, after falling from a peak in 2007 of $4.85 per share or more than $800m.
The company posted a full year loss of $15.5m for the year to July. Debt to lender ANZ Bank rose to $46m from $39.1m.
Wilkinson said while the company had been ahead of its time in terms of its online offering and expansion plans into the US and UK markets, this had also hindered it.
"Pumpkin Patch were always a bit of a darling," Wilkinson said. "They were one of the first businesses to go into the States and the UK but they took a bath in both markets," he said.
"I think unfortunately what's happened is all of these expansions have ultimately ended up coming to haunt them because the market has moved away from them. They've been shouldered with this historical debt and the legacy issues they've had from this expansion."
The business has closed some stores but still operates around 150 globally.
Staff at two stores were unaware of its situation yesterday after the retailer issued a statement to the NZX.
"I haven't heard anything, we didn't know anything about it," said the Ponsonby manager. "My store manager in Westgate had no idea either - she's training some new casuals at the moment," she said.
"Does that mean we're going to lose our jobs?"
Last month directors said the 2016 financial year was the first in a four-year turnaround plan, and "very good progress has been achieved, although this is not immediately apparent from the headline numbers reported".
Shareholders should note that it is highly unlikely that there is any residual value in the company's equity.
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The company told investors that its directors had given an undertaking to the bank that it would put forward proposals by October 20. This has been pushed out to October 31.
In its statement, Pumpkin Patch said work on these proposals - together with talks with lender ANZ Bank - had generated "substantial uncertainty" around the future of the company given its financial situation.
"Shareholders should note that it is highly unlikely that there is any residual value in the company's equity", it said.
The company expects to complete this work in the next few days and will announce the outcome to the market.
The value of Pumpkin Patch shares has fallen 49 per cent in the last 12 months.