New Zealand-based childrenswear retailer Pumpkin Patch has announced plans to shut-down its retail network in the United Kingdom, due to plummeting sales.
The brand, which also operates 185 retail stores across Australasia, recently finalised a review of its UK retail operations, run by a stand alone UK registered subsidiary company.
The review revealed falling sales across most of the UK-based outlets and as a result, Pumpkin Patch Group CEO Neil Cowie said “some or all of the UK stores will be closed”.
“The return on investment from the UK retail operation has not been acceptable and the current trading losses being generated only accentuate this. We expect the UK operation would continue to make losses for some time to come, so it just doesn’t make sense for us or our shareholders to continue to maintain the existing operation up there,” he said.
“As part of the administration process we are effectively handing over the day to day control of the UK subsidiary to the administrators. As such we cannot pre-empt what actions the administrators may take in the coming days and weeks. However we anticipate that if they cannot find any alternative options some or all of the UK stores will be closed.”
In response to the retail closures, Cowie said the Pumpkin Patch would be ramping up its existing UK online activities to continue supplying Pumpkin Patch product to its local customer base.
He also said the decision announced today will not materially impact any other group company including the New Zealand parent company, the Irish subsidiary company that operates the Pumpkin Patch retail stores in Ireland, or the group companies that operate the 185 retail stores across Australasia, the 20 international wholesale markets, or the online businesses operating in five international markets.
Looking ahead, Cowie said the elimination of the losses from the United Kingdom retail operation would also improve total group operating earnings and cash flows from the second half of the 2012 financial year and allow the business to focus on growth in stronger areas.
“Our major focus has been on Australasian retail sales across the Christmas period which tracked well above last year,” he said.
“We are still seeing very strong growth across all of our online markets and the early indications are that wholesale customers will be increasing orders in 2013 fiscal year. Our wholesale team is also currently in discussions on two new wholesale opportunities which we hope to be able to confirm within the next two months.”