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Pumpkin Patch profit falls 27.5%

Wednesday 17th September 2008

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Pumpkin Patch, the children's clothing chain that has grown to 227 stores, posted a 27.5% drop in full-year profit on losses in the US and UK. The company lowered its final dividend.

Net income fell to NZ$17.1 million, or 10.12 cents a share, in the 12 months ended July 31, from NZ$23.5 million, or 13.76 cents, a year earlier, the company said in a statement. Sales rose 12% to NZ$410 million.

The company reported an EBIT loss of NZ$2.4 million in the UK, including one-time quota costs, saying retailing was "very soft" and slowed during the year. In the US, where the EBIT loss was NZ$8.9 million, retailing "has been very tough," it said.

Weakness in the US and UK eroded the benefits of better earnings in Australia and New Zealand, where the company derives about two third of revenue. In Australia, its biggest market, EBIT rose 16% to NZ$41.2 million while New Zealand EBIT rose 0.2% to NZ$12.7 million.

"Trading conditions are likely to remain very difficult in the US and UK and short-term earnings will continue to be impacted by those conditions," the company said. Still, "these markets play an important role in the overall global strategies of Pumpkin Patch and will deliver long-term value to shareholders."

In Australia and New Zealand, "2009 is likely to be more difficult than 2008."

The company's earnings presentation used pre-IFRS accounting while net income figures are accounted for under IFRS.

The company will pay a final dividend of 3.5 cents a share, down from 4.5 cents a year earlier.

The shares traded unchanged at NZ$1.49 and has declined about 55% in the past 12 months.

By Jonathan Underhill

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