China on the radar for Pumpkin Patch

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A tough 18 months for Pumpkin Patch is showing signs of letting up in the new year, as the company approaches signing wholesaler deals with customers in China.

At the listed children's clothing maker's annual meeting in Auckland yesterday, chief executive Maurice Prendergast also said signs existed of improving business in its cornerstone Australian market.

In the last year, the firm suffered from a disastrously timed foray into the US which started just before the global economic downturn. The heavy debt load taken on to fund this expedition and crash in consumer spending forced the company to write off $40m from its US stores which was the main contributor to the group's reported loss of $26.7m for the year ended 31 July.

"The last 18 months have been a very tough time for the entire Pumpkin Patch team," Mr Prendergast said.

"We faced unprecedented volatility and while Australasia is now looking more stable, other markets do remain volatile."

He said it was far too early in the year to give earnings guidance, but said he believed the group was through the worst of the global recession and stability had returned to most markets.

A bright spot on the company radar was the impending signing of a wholesaling agreement with customers in China, Jordan and Lebanon with shipments to those new markets set to begin in early 2010.

The agreements open up new markets and Mr Prendergast said they should be immediately revenue-generating because there was no need for capital expenditure.

That would work to offset the downturn in orders from existing wholesale customers.

The Australian market, where the company has 111 stores, was showing signs of improved trading, which were expected to continue through 2010.

The group planned to add 30 to 40 new stores there over the next three years.

Mr Prendergast said trading in New Zealand was worse than in Australia, but should improve by the end of 2010.

David Jackson and Jane Freeman, who each retired by rotation, were re-elected as directors at the meeting.