New Zealand childrenswear retailer Pumpkin Patch has hinted at trouble on the horizon amid a “volatile” trading environment.
Commenting on trading conditions and its full year guidance for the fiscal year 2014, the company said after-tax earnings before reorganisation costs may be between $1 million and $3m in the year ending July 31.
The figure is a drop from from the company's previous guidance that earnings would be unchanged from the $8.5m a year earlier.
Pumpkin Patch suggested that its review had been affected by trading conditions in the company’s key Australian and New Zealand retail markets, which it said “have remained at levels similar to those experienced across the first half period”.
“The trading environment is volatile and continues to be dominated by high levels of promotional activity and lack lustre consumer demand especially in Australia where there is little sign of any meaningful improvement in the near term.”
Pumpkin Patch also revealed that the strategic review of the company announced in March is well advanced.
“The review is primarily focusing on the drivers of underperformance in recent years and the identification of longer term opportunities to improve operational and financial outcomes.
“While key long term operational and brand related strategies have not yet been finalised the review to date has identified a range of system and process investment requirements that will generate improvements in underlying earnings and working capital and debt requirements.”
The company expects to provide a further update on the strategic review by the end of June.
The update follows the recent resignation of the company's chief financial officer, Matthew Washington, who resigned earlier this month to “pursue other opportunities” after 14 years of service.