Daily ShareChat: Pumpkin Patch

The Witchery chain's plans to launch a children's range into 18 of its existing stores in Australia and New Zealand highlights the fact Pumpkin Patch is facing increasing competition, says Buffy Gill, an analyst at Goldman Sachs JB Were.

The Witchery Kids label will cater for boys and girls aged two to nine years old. While it will be stocked within existing stores initially, where there isn't enough space to house the different brands, separate stores may be considered and a more extensive rollout potentially be cavassed in 2011.

"Witchery's announcement adds to a slew of international retailers who have recently announced entry into the Australian market including Gymboree, Gap and Zara," Gill says.

"Gap has confirmed that it will be stocking parts of its Kids and Baby ranges in its flagship Melbourne Chadstone store due to open at the end of August."

Gill doesn't expect any material impact on Pumpkin Patch's Australasian operations, given the lead time it will take for the new brands to reach critical mass and gain traction with consumers.

Witchery has 150 stores in Australia and also stocks through the David Jones department stores while in New Zealand it has only 12 stores and also stocks the Smith & Caugheys, Kirkcaldie & Stains and Ballanynes department stores.

By contrast, Pumpkin Patch has 30 New Zealand stores in New Zealand and 114 in Australia and plans a further 30 to 40 new stores in Australia over the next three years.

Recommendation: Buy.

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