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Pumpkin Patch plans to head down market with stand-alone everyday brand

Monday 26th April 2010

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Pumpkin Patch plans to launch a new, cheaper brand in stand-alone stores to tap demand for so-called everyday clothing.

The retailer is in the final stages of developing the new brand, which will launch in the next few months. It will initially open 6-8 stores, mainly in Australian shopping malls, this year, it said in a statement. With a slimmer range the outlets will also be smaller.

The new brand "will be at a lower price point," offering a limited range of basics like T-shirts and sweatshirts, chief financial officer Matthew Washington told BusinessWire. "There are some people that for whom Pumpkin Patch is everyday wear but the bulk of people across Australasia will not put Jonny in a pair of Pumpkin Patch jeans to go climb a tree," he said.

Shares of Pumpkin Patch rose 0.5% to $2.21 and have soared almost 90% in the past 12 months. Last month the company posted a 50% gain in first-half profit to $14.3 million, while trimming debt and inventory levels. At the time it said it was "still cautious of the retail spending outlook for the remainder of the financial year."

Pumpkin Patch hasn't revealed the new brand yet and Washington declined to comment.

The company is confident that superior service and lack of checkout queues will differentiate its stores from low-cost retailers such as Kmart and Warehouse Group.

The new stores will initially be rolled out in Australia and New Zealand, with potential to be launched into other markets.

Washington said the company has no immediate plans to sell the new range through third-party stores though it has held "positive" discussions with some of its wholesale customers.

The new branded stores won't have an immediate impact on earnings or debt levels, chief executive Maurice Prendergast said.

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