Pumpkin Patch yesterday reported a $9.1 million after-tax loss for the financial year to July 31. It had spoken of a “modest loss” earlier, but cited extra impairment provisions against under-performing stores and working capital risks as impacting on the final result.
The loss is an improvement of $2.4 million on the $11.5 million loss Pumpkin Patch reported for the previous financial year.
The company also reported a drop in profitability over the previous year, putting normalised EBITDA for the 2015 financial year at $11.7 million against FY14’s $17 million. Pumpkin Patch attributes this to the strong Kiwi dollar, which has impacted Australian sales and profits. It also lost key wholesale customers in the northern hemisphere, and spoke of lower online sales in the UK and US.
Total group revenue was $238.5 million. Same-store sales in New Zealand were up by just 0.5 percent and flat in terms of online sales, but Australia was looking healthier at 6.4 percent same-store and up 7.5 percent online.
Outside Australasia, sales were down 7.5 percent compared to the previous year.
Company chair Peter Schuyt praised the core retail business.
“Our core retail businesses in New Zealand and Australia have performed well in a highly competitive and promotionally driven market, but the strengthening of the New Zealand dollar had a significant negative effect on the translation of Australian dollar sales and profits. This had a material impact on overall profitability for the year, partially offset by improved buying terms associated with a higher US dollar cross rate.”
Schuyt said Pumpkin Patch had made real progress in improving stock efficiency and reducing debt. In keeping with the stated priorities of new chief executive Luke Bunt, who is the former CFO of The Warehouse Group, Pumpkin Patch’s net bank debt has been reduced by approximately $20 million in the past year in real terms and it has secured banking facilities with ANZ until December 2017. The company still has net debt of $29 million.
Bunt says that while good progress has been made, there’s still a lot of work to be done.
“The review has underscored that Pumpkin Patch’s focus must come back to its customers, the style of clothes they want to buy for their kids, the experience they want to enjoy in our stores and how they want to communicate and engage with us.”
“To achieve this, investment will be required in product design, all our channels to market and on various customer communication mediums.”
The company has indicated that earnings for the year to come are likely to be “considerably below” those for this year.