Pumpkin Patch sales slip
Children's fashion retailer Pumpkin Patch has reported a $4.7 million first-half net profit but sales slipped on subdued trading and the late arrival of summer stock.
The result was a dramatic turnaround from the $30m loss Pumpkin Patch reported for the same period last year but that was largely due to reorganisation costs and store closures.
When you take those costs out of the equation, the half-year underlying net profit was $6.5m, down almost 10 per cent on the same period last year.
The company said revenue also fell 5 per cent to $153.1m.
Chief executive Neil Cowie said the result "should have been better than it was", but it was pleased with the progress made in reorganising the business to generate long-term growth.
Trading conditions in its key markets New Zealand and Australia had been "pretty subdued", he said.
"Adding to this, we experienced the late delivery of summer inventory at the start of the season," Cowie said. "This meant the level and mix of inventory was not ideal and sales opportunities were lost.
"Even though trading conditions across the rest of the period more closely tracked last year and we had a reasonable Christmas, we couldn't recoup the sales and earnings lost at the start of the season."
Despite the challenges, Pumpkin Patch still managed to increase operating earnings and margins in the key Australasian markets.
Online sales performed strongly, up almost 30 per cent year-on-year to more than $19m, Cowie said.
Online sales again exceeded the operating earnings generated by all the company's New Zealand retail stores combined, while in Australia online sales were equivalent to 15 per cent of store sales, which Cowie said was significantly ahead of the average retailer.
Sales in its restructured international division rose 6 per cent in the period, due to increased orders from most existing markets and sales to new markets. But sales were restrained by the strong Kiwi dollar.
Pumpkin Patch last year closed underperforming stores in the United States and Britain, and now mainly sells overseas through partner stores.
The retailer will not pay an interim dividend but said it would revisit that policy at the end of the financial year. Its shares were trading down 1.5 per cent to $1.30 this morning.