The Kiwi children’s clothing retailer included the announcement in its unaudited results for the six months ending on 31 January, which were released at the end of last week. It said the third parties had “proactively indicated their interest” in Pumpkin Patch following an announcement at the last annual meeting, when the company said it was beginning a capital review.
“The board believes it is in the company’s interests to seek formal proposals in respect of either an acquisition of the company or in respect of recapitalisation,” the report says. “Further announcements to the market will be made if any proposal received represents a realistic option for the company.”
The New Zealand Herald reported today that it understood the third parties are from the retail trade, passing on market speculation that Briscoe Group’s Rod Duke – who owns 10 percent of Pumpkin Patch – might try to take control of the company. The Herald also tipped South African retailer Pepkor, which has just purchased Postie, as a potentially interested party.
Pumpkin Patch shares jumped up to 30c following the news, remaining at 31c today in spite of a supplementary message released by Pumpkin Patch yesterday morning:
“The board wishes to confirm that the process of seeking formal proposals in respect of either an acquisition of the company or recapitalisation has only just commenced and no conclusions should be drawn at this stage concerning whether any transaction would result or whether the value of any transaction would be more or less than the market price prior to the release of Friday's announcement.”
Pumpkin Patch’s half-yearly report said the company’s total revenue for that period was $121.9 million, up just 2.2 percent on the same period last year.
Growth was slightly healthier with regards to profit. Pumpkin Patch’s net profit after tax excluding reorganisation costs was $1.5 million, up 10.7 percent on last year. Including the costs, it dropped to $0.7 million.
Chief executive Di Humphries says the competitive environment remains intense but the company has achieved “solid” same-store sales growth. Australian stores saw an increase of 5.7 percent and New Zealand same-store sales grew by 1.8 percent, but difficult trading conditions in Pumpkin Patch’s international business saw sales within these businesses decline by 1.2 percent.
She says positive signs included a 10 percent increase in traffic on Pumpkin Patch’s website, and more frequent customer purchases across retail and online channels.
““We have strengthened our connection and interaction with our customers both in New Zealand and Australia, and as a consequence of this and refinement of our product range our customers are re-engaging in a very positive and sustainable way,” Humphries said.
She said it was “still early days” in terms of the implementation of Pumpkin Patch’s new customer contact strategy, but the current results showed the company was headed in the right direction.
Initivatives in the company’s transformation programme include “right-sizing” the retail network, with nine Australian stores destined for closure in the latter half of this year. The supply chain is also being redesigned, an integrated customer contact strategy is being put in place, and online functionality is being developed.