Throughout the last financial year, the company closed 12 stores, mostly in Australia.
This impacted on sales, with revenue dropping 11 percent to $212.4 million. For the full year, there was a three percent increase in same store sales growth in Australia, while New Zealand stores remained flat.
Pumpkin Patch managing director Luke Bunt said several legacy issues had been negatively impacting the business, while the retail environment continued to be very competitive and challenging.
However, he said that improvements to the core business in the second half of the last financial year were promising.
“It is encouraging that improvements in the core business seen in the second half of the last financial year have continued into the early part of F17. For the eight weeks ended 25 September 2016 same store sales for Pumpkin Patch in Australia and New Zealand were up 5.8 percent and 5.4 percent respectively.”
First Retail managing director and retail expert Chris Wilkinson says the Pumpkin Patch story is a sad one.
“Here we had a cutting edge business that was a real trailblazer in its day,” he says.
“It was one of the first to theme its stores and create a highly immersive experience, however that was before the real successes that big-box retailers found in the children’s wear space.”
The internet also played a part in impacting the brand, he says.
Secondhand sites like Trade Me meant many children’s clothes found a second life, taking away the need for parents to buy all brand-new clothes for their kids.
“While Pumpkin Patch was an early innovator online, they probably were too early to fully leverage that wave, plus they were investing heavily in the UK and US which would have been swallowing capital,” Wilkinson says.
In order for Pumpkin Patch to improve its future, Wilkinson says its focus should be on the Middle East market, which has a big appetite for unique brands.
“Whilst they have been there before, developing their distributorships in the Gulf States strategically is one of the few options that will give them necessary relief,” Wilkinson says.
In the financial report, Bunt said a new wholesale franchise partnership is the Middle East has been created. Pumpkin Patch will regain access to its first-tier malls across six countries.
The UK retail market is more of a tricky one for the retailer, Wilkinson says, as it’s having its own challenges.
“If Pumpkin Patch's distributor can find a resilient niche, then they will see success, otherwise the challenges will remain,” he says.
Bunt said a new relationship with a department store will allow the brand to expand in England, Scotland and Wales.
“The potential for growth through these partnerships is significant but will take time to develop,” he says.