Daily ShareChat: Pumpkin Patch

By Jenny Ruth

Monday 15th March 2010

Children's wear company Pumpkin Patch needs either a robust retailing environment in Australian and/or a step change in its wholesale division's earnings to give its share price a genuine boost, says Sarndra Urlich, an analyst at First NZ Capital.

"We take the view that the former is still elusive and the latter could take some time to eventuate," Urlich says.

Australia accounts for 87% of Pumpkin Patch's earnings and, in the near term, its retail environment will be challenged by rising interest rates and the impact of there being no fiscal stimulus package this year to match last April's, she says.

"Other markets, including the UK and the US, are too small to have a meaningful impact with the latter expected to incur further losses over the near term."

Pumpkin Patch reported a 50% jump to $14.3 million in first-half net profit, reflecting a much lower trading loss in the US of $800,000 compared with $6.2 million in the previous first half. Australian sales were subdued, down 0.5% in constant currency terms, while New Zealand sales were underwhelming, down 3.2%, she says.

Urlich is forecasting adjusted net earnings of $25 million for the full year, rising to $26.9 million the following year.

Recommendation: underperform.

Comments from our readers

No comments yet