AUCKLAND: External cost pressures have forced Pumpkin Patch to rethink its American expansion strategy.
The childrenswear retailer has reported a half year net profit after tax of $10.2 million, which represent a 23.7 per cent slump from the same period last year under new international accounting standards. Although total operating revenue increased 13.5 per cent to $205 million, shares in Pumpkin Patch have fallen 62 per cent since January 2007 when they were at an all-time high of $4.95. Company management has attributed the dissapointing half profit result to higher quota costs, higher interst charges and a higher effective tax rate.
Chief executive Maurice Prendergast said Pumpkin Patch was prepared to slow down its rollout of stores across the American market if economic conditions continued to worsen. While sales in Australia and New Zealand have been strong over the last six months, sales in the UK and US were largely generated through store openings. Financial reports indicate sales in the US were up 61 per cent to $13.2 million but quota costs of $1.1 million meant a $995 000 loss in earnings before interest, tax, depreciation and amortisation.
Short-term earnings from the US are expected to remain subdued with only six store openings scheduled for the next year.