Firm’s focus on boosting performance after value of potential sale too low.
Pumpkin Patch assessed proposals from up to 10 potential buyers, including private equity firms and trade players, but failed to secure a bid that offered suitable value to shareholders.
The embattled children's clothing retailer said yesterday it had canned plans to sell the business.
That followed an announcement in March that "certain third parties" had expressed an interest in the company and its board was seeking formal proposals around either an acquisition or recapitalisation.
Last night, chairman Peter 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. "We're still working diligently on our performance and business improvement programme and we're experiencing some good traction around that, which we can see in our balance sheet in terms of inventory and debt levels."
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.
Schuyt said the eight to 10 potential buyers, which he didn't name, had been mostly overseas-based organisations.
"In reality what we received were some informal views around value."
Schuyt said the company was on track to meet a target of closing around nine poorly performing stores in the current financial year.
Vacant staff positions had not been filled, while redundancies had also occurred as part of the focus on reducing head office costs, Schuyt said.
He was unable to provide a figure on how many job losses there had been.
Meanwhile, Schuyt confirmed previous guidance for normalised earnings before interest, tax, depreciation and amortisation (ebitda) of around $14 million in the year to July 31.
He said market conditions were expected to remain challenging and earnings could be volatile.
"You've still got an environment where there's a lot of discounting and a lot of competition," Schuyt said. "Nothing's changed as far as that's concerned, but we're working probably harder on our promotional activity and trading the business and getting stock through the stores. The team's done really well as far as that's concerned."
He said there was "no silver bullet" for Pumpkin Patch.
"It's delivering results which are far below what we believe it is capable of," Schuyt said. "It's just going to be hard work and continual improvement."
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.
Rickey Ward, New Zealand equity manager at investment firm JBWere, said it would be difficult for Pumpkin Patch to "trade its way to a better outcome" in a tough retail market.
The company's debt levels meant there wasn't a lot of "wiggle room" if trading conditions took a turn for the worse, Ward said.
Pumpkin Patch had net bank debt of $52.7 million at the end of January.
Its shares, which have shed 48 per cent over the past year, closed down 3.9 per cent at 25c last night, giving the company a market capitalisation of $42.3 million. The stock closed as high as $4.95 in 2007.