Childrenswear retailer Pumpkin Patch has reported a 44 per cent drop in its first-half net profit after tax from NZ $14.2 million to NZ $8.1 million as a result of the “lacklustre trading environment”.
The New Zealand-based company’s CEO Maurice Prendergast blamed heavy discounting across all markets for the slow sales.
“We always knew 2011 was going to be a tough year especially considering the retail softness that has developed since the early part of 2010,” he said.
“We experienced supply chain difficulties and delivery delays early in the season due to supplier factory closures and cost pressures within the supply chain.
“Adding to this was the extreme weather events in Australia and the United Kingdom and a disappointing post-Christmas period. We certainly had plenty of challenges to deal with.”
Earnings before interest and tax (EBIT) in Australia was down 25 per cent to NZ$14.9 million and the same weakness was experienced in New Zealand with a 24 per cent decline to NZ $4.7 million.
In the UK and Ireland, however, promotions helped drive store sales by 125 per cent with an EBIT of NZ$0.1 million, which is up from a loss of NZ$0.2 million last year.
“While we are expecting short term trading conditions to remain challenging we will continue to implement our growth strategies that will deliver long term value for our stakeholders,” Prendergast said.
“We are able to ride out the current short term trading weakness and at the same time position the company to benefit when trading conditions improve.”