Investors punish Pumpkin Patch
Pumpkin Patch's share price has fallen to an all-time low after it reported a 98 per cent plunge in net profit for the half year to January 31.
The children's clothing company returned a $106,000 profit in a result included reorganisation costs of $1.8 million.
The company's shares dropped 19 per cent, or 13c, to close at a low of 55c.
The last time the company's shares traded near these levels was December 2011 when they hit 57c.
Director of stockbroking firm Hamilton Hindin Greene Grant Williamson said the results were "not pretty reading".
Shareholders had been suffering for a couple of years now, Williamson said, and there was still "more pain" to go through as the company worked through its strategic review in a bid to get things back on track.
Revenue for the period fell 16.5 per cent to $127.8m compared to the previous corresponding period.
The company said it would not pay an interim dividend.
Chief executive Di Humphries said the result reflected the challenging conditions in its core markets, including Australia, New Zealand and Ireland.
However, the company was making the changes needed to take advantage of multi-channel and multi-brand opportunities, Humphries said.
"I said when I took on this role that there was a lot of work to do to achieve the results expected from the company," she said.
"Planning and implementing the changes needed in a company of this size and complexity does and will take time." Humphries, who took over as chief executive in August last year, said trading results were "well below acceptable levels" and trading conditions were not likely to materially improve in the short term.
She was "very disappointed" the changes made to date had not flowed through to improved profits.
Sales were affected by major supply-chain disruptions resulting from the failure of two core suppliers, and major flooding in a key supply region in China, Pumpkin Patch said.
New Zealand total sales were down 14 per cent to $24.1m for the six-month period. Australian sales were down 19 per cent to $82.8m.
Sales in both countries were affected by soft retail market conditions and tough competition including high levels of discounting.
Internationally, total sales, including sales at its three stores in Ireland and online, dropped 6 per cent to $20.9m.
A 34 per cent increase in international online sales was offset by the impact of changes to the timing of deliveries to international franchise stores and the softer retail conditions in Ireland.
The result included reorganisation costs of $1.8m including $1.3m in redundancy costs and costs associated with the closure of four underperforming Australian stores.
Humphries said that during the past six months the company's low-cost Charlie & Me brand delivered solid sales and earnings growth despite the challenging retail environment, but no separate figures were provided.
Pumpkin Patch chairwoman Jane Freeman said details of Pumpkin Patch's new long-term strategy would be announced mid-year.
Freeman said Pumpkin Patch's international database meant it was strongly positioned for international growth in online shopping but it needed to have a clear understanding of customers' requirements.
Humphries said she expected "decent" profit growth from international expansion during the next few years.
Pumpkin Patch was in the process of expanding into Mexico, Venezuela and the Middle East.