NEW ZEALAND: Childen's apparel retailer Pumpkin Patch is to close nearly 60 per cent of its US stores.
In a statement released to the New Zealand stock exchange this morning (June 30), the Auckland-based company said it intended closing 20 of its 35 stores in North America.
The decision follows a strategic review undertaken by the company back in February in response to the global financial crisis.
It comes just weeks after Australian sleepwear company Peter Alexander announced it was also pulling its retail operations out of the US and just a day after fellow Kiwi apparel company Line 7 was handed over to receivers.
Pumpkin Patch chief executive Maurice Prendergast, whose company operates 220 stores across Australia, New Zealand and the US, said the imposition of import quotas and the prolonged financial crisis in the US had created "significant headwinds" for the profitability of the company's US operations.
Prendergast said the stores to close were generally the more recently opened stores that had struggled to gain traction in the difficult retail environment in the market since late 2007.
He said the company had renegotiated lease terms for 11 of the remaining 15 stores at rent levels that better reflected current market conditions and discussions on the remaining four stores were ongoing.
Prendergast said if current trading conditions continued the company's remaining US stores would generate a "close to breakeven" earnings result.
The company has also reduced bank debt by around 60 per cent, lowered inventory levels and realigned overheads to better suit the current environment across all operations.
Prendergast said the decision to close the stores had not been an easy one.
"We of course must remember that a number of our valued team members in the United States are being impacted by these changes. We are a close knit team and decisions like this are always difficult. We have senior managers up in the US at the moment supporting team members through what is obviously a difficult time for them."
Brands in the Pumpkin Patch stable include Mini Patch, Patch for Kids, Patch Maternity and Urban Angel.