Friday 4th November 2016
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Pumpkin Patch's receivers have taken the razor to the failed children's wear retailer's Australian stores with plans to close 27 stores nationwide, laying off up to 145 staff.
KordaMentha's Brendon Gibson and Neale Jackson outlined the Pumpkin Patch and Charlie & Me closures on the other side of the Tasman, which will see 52 staff redeployed to other sites, on top of the projected job losses. The cuts are deeper than what was signalled for New Zealand last month, with the job losses equating to almost 15 percent compared to less than 10 percent in NZ.
"We have already moved to close some stores in New Zealand. Having now had time to assess the financial viability of the Australian retail footprint, unfortunately it is necessary to also close some stores in an effort to stabilise the broader business," Gibson said in a statement. "Staff have been advised of their store closure and the receivers' intention to pay all entitlements."
Gibson has previously said Pumpkin Patch's existing plans to shut down some outlets would be accelerated "in an effort to improve saleability and viability" which would likely lead to job losses amongst the 600 New Zealand staff and 1,000 Australian employees.The receivers want to keep the retailer operating as they hunt for a buyer.
The Australian stores will close by Nov. 15, while the seven New Zealand stores are scheduled to be closed by Nov. 8.
In its full-year results published in September, Pumpkin Patch told investors its directors had given an undertaking to the bank that it would put forward proposals by Oct. 20, which was later pushed out to Oct. 31. The capital constraints were highlighted in the accounts as a "material risk" to the ongoing viability of the business. Pumpkin Patch's debt to ANZ Bank rose to $46 million from $39.1 million in the year to the end of July 2016. It posted a loss of $15.5 million in the same period.
Last year the retailer spurned a number of parties interested in buying the business, saying at the time that they offers weren't compelling enough for the board to consider seriously. Instead, it tried to lift its trading performance in a four-year turnaround programme, which it claimed was starting to show improvements.
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