Pumpkin Patch posts loss

pumpkin-patchChildren’s wear retailer, Pumpkin Patch, posted a loss in sales in its half-year report and problems with its website have also been added to the company’s list of woes.

In the company’s unaudited report, sales fell 16 per cent to $102.8 million for the six-month period ending January 31, compared to the $121.9 million in the previous corresponding period.

Sales contributed by the wholesale business were down 72.8 per cent on last year, which, according to the company, was expected, and investors were previously warned about it. This was due to the loss of key international wholesale accounts.

Online sales fell 12.7 per cent compared to the same period last year. This was, the company said, unexpected, and was, “caused by a significant shortfall of inventory available to the channel, combined with difficulties in the transition and upgrade to a new e-commerce and communication platform”. The retailer said this particular issue has now been largely resolved.

The cost of reorganising the business and money set aside against loss-making stores and underperforming assets was $3.4 million.

In New Zealand, same store sales were down 4.8 per cent. The New Zealand result, according to the company, reflects the impact of long term underinvestment in the bricks and mortar network, adversely affecting competitiveness, and requiring time and capital investment to rectify. The company stated, however, it was able to maintain positive momentum in Australia, with same store sales up 1.5 per cent.

The company’s managing director, Luke Bunt, and chief financial officer, Dave Foster, stated they are expecting normalised EBITDA for the year to the end of July 2016 to be between $2.8 million and $3.4 million.

They said over the next six months, as the company continues to work through the complex and challenging issues it faces, they will assess whether any further provisioning against asset risk is required at year end.

Pumpkin Patch reported normalised EBITDA of $11.7 million in the 2015 financial year and $17 million in 2014.

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