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Pumpkin Patch finds trading tough

Pumpkin Patch finds trading tough

Nov. 23 (BusinessDesk) - Children's clothing retailer Pumpkin Patch is experiencing tough trading in all its markets, particularly in its largest market, Australia, managing director Maurice Prendergast told the annual shareholders' meeting.

“Like all retailers in Australia, we remain very cautious of what will happen in 2011,” Prendergast said.

“The first three months have been very difficult with the need to have very strong promotions in order to generate sales.” Still, the company plans to open 14 new stores in Australia during the current financial year including six of its new more downmarket brand, Charlie & Me brand, taking total Australian stores to 133.

The outlook for the New Zealand market is similar “with trading conditions remaining tough.” The company will open three more New Zealand stores this year, taking the total to 52.

In Britain, retail confidence is at an all-time low but the company is seeing good signs from the three new stores opened in 2010. It expects to open three more stores in Britain and has just opened its second in Ireland. “While the financial environment is far from encouraging, both of the Irish stores are trading well,” Prendergast says. The new stores will take the Britain/Ireland total to 44.

In the US, where it has 20 stores, there has been no real change to “a very ordinary economy” but the company's team remains motivated to improve results.
Pumpkin Patch expects its wholesale and direct selling division will continue to find business difficult while the New Zealand dollar remains high.

Nevertheless, it has entered four new markets this year and will open its first store in China this year.

The company has opened four Charlie & Me stores this year and plans a further one before Christmas. “Trading to date is going as planned” but it is very early to assess the new brand's long-term proposition, Prendergast said.

In the wake of executive chairman Greg Muir's decision to resign, Prendergast hit out media criticism of Muir, who had been chairman of Hanover Group from December 2005 to October 2008 and was there when the group froze $554 million of investors’ funds in 2008.

“Greg has been a valuable part of the Pumpkin Patch success story,” Prendergast said.

While some have criticised the company's returns to shareholders, since Pumpkin Patch listed in mid-2004, “we have out-performed the NZX 50 by more than 180% and over the last two years we have massively outperformed the NZX 50 by 480%," he said. "In fact, we were the number one ranked New Zealand retailer on the NZX for total shareholder returns over that two-year period,” he said.

Pumpkin Patch shares are trading at $1.82, unchanged from yesterday, near the bottom of their $1.70 to $2.30 range over the last 12 months.


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