15 Mar 2012

Pumpkin Patch sinks into the red after store closures

6:03 am on 15 March 2012

Pumpkin Patch's books have sunk into the red as it incurred $34 million of restructuring costs in closing its underperforming British and American stores.

The listed childrenswear retailer lost almost $30 million in the six months to the end of January, compared to an $8 million profit in the same period a year earlier.

When restructuring costs are stripped out, it made a profit of $4.1 million, half that of a year earlier.

Revenue rose 17% to $161 million driven by a 12% increase in Australasian retail sales and a 32% increase in wholesale and franchise sales.

Chief executive Neil Cowie says the company has endured challenging retail conditions across most of its markets in the last six months, but is well positioned for growth now the restructuring is complete.

Mr Cowie says online sales rose 50% during the period, and now a quarter of the company's business is generated outside of its stores.

He says the retailer is focusing on areas such as design, international markets and growing the wholesale and online businesses.

Mr Cowie says retail is still very important and Pumpkin Patch has proven in the last couple of months that it can drive sales at the appropriate price points.

The retailer will not pay an interim dividend, but directors will review the situation at the end of the financial year.