29 Sep 2014

Pumpkin Patch shares continue slide

6:08 pm on 29 September 2014

Broker Forsyth Barr says it expects shares in Pumpkin Patch to underperform, as the company continues to manage through tough trading conditions.

The share price has been declining for the past 18 months from a closing high of $1.48 in mid-January 2013.

On Friday, the children's clothing retailer posted a $10.2 million annual net loss for the 12 months ended July - a big step down from the previous year's $5.1 million profit, which itself was just a fifth of the 2012 profit.

Pumpkin Patch has also suspended dividends. The result also includes $14.6 million of restructuring costs.

Chief executive Di Humphries said she has reviewed every aspect of the business, and many improvement projects have begun which will pay off in 2016.

But Forsyth Barr anaylst Chelsea Leadbetter said though there is confidence the company can turn itself around, it will take time to deliver a meaningful improvement.

Elevated debt and inventory levels remain a concern, as do difficult trading conditions in Australia.

Ms Leadbetter said Pumpkin Patch's near-term outlook remains challenging and that is why it has downgraded its rating for the company.

The price is unlikely to trade higher until there is an improvement in the outlook for near-term sales and profit.

Shares fell 2 cents to 41 cents by the close of trade on Monday.

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