Childrenswear retailer Pumpkin Patch (NZX: PPL ) has reported its full year result which saw its underling net profit fall by 50%. Goldman Sachs maintains its hold recommendation on PPL while reviewing its earnings forecast and valuation.
PPL reported an underlying net profit after tax of $12.6 million in the year ending 31 July 2011 and this was in the range previously advised to the market. Maurice Prendergast, PPL’s CEO, said that “the result reflects the very challenging retail environment and the effect of significant increases in garment costs due to cotton price escalation. Events such as the Christchurch earthquakes, the Queensland floods, and political unrest in the Middle East added to these challenges”.
During the year the Company commenced a number of initiatives including the plan to close the United States retail stores, the review of United Kingdom retail stores, and the realignment of Head Office costs. Prendergast commented “We are currently taking a hard look at all aspects of the business. If the results from a store are not acceptable and we cannot find a suitable solution the store will be closed and if we are incurring a cost that is not generating an appropriate benefit we will remove the cost. This is an ongoing process that will continue throughout the 2012 year”.
PPL’s shares today traded at $0.80c
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Recommendation sourced from Dow Jones Newswires and IRESS.
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