Dollar decline cuts Pumpkin Patch debt

Children’s clothing manufacturer Pumpkin Patch is reporting a significantly improved debt outlook as the New Zealand dollar eases against the greenback.

The company says it now expects total bank debt at July 2009 to be between $30 million and $40 million, better than analysts’ forecasts, and around half the $60 million to $70 million expectation previously released.

A release to the NZX said Pumpkin Patch had taken the decision to apply significant gains made in its foreign exchange cover to its existing bank debt.

“Given the current volatile nature of the global economy, a major focus for us has been the ongoing reduction in bank debt and the strengthening of our balance sheet,” chief executive Maurice Prendergast said.

Prendergast also took a swipe at Goldman Sachs JBWere.

"We were disappointed by the recent inaccurate reporting by Goldman Sachs JBWere on the aging profile of our bank debt facilities and we believe that the market may have been negatively influenced by those inaccurate reports.”

Prendergast reiterated that most of the company’s bank debt facilities expire in December 2010.

Meanwhile, Prendergast said “challenging” trading conditions continued, especially in the United States, given the current global economic crisis.

“These conditions are not expected to significantly improve during the remainder of the current financial year.”

Pumpkin Patch has, however, reviewed all areas of its business which has included cutting salary and wage costs both at its stores and head office.

“The cost base now in place better matches the more subdued trading environment that is expected to prevail through into the 2010 financial year.”

With the all important Christmas trading period just ahead, Prendergast said it was too soon to provide any earnings guidance for the 2009 financial year.

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