Pumpkin Patch sees 'minor softening' in Australia, NZ

Thursday 26th June 2008

Pumpkin Patch, the children's clothing chain that has grown to 227 stores, said slowing economic growth in its biggest markets of Australia and New Zealand is resulting in only a "minor softening" in sales.

"Solid trading conditions" in the first half of fiscal 2008 have continued into the second half and it is confident its brand strength will underpin revenue, the company said in a presentation to Asian investors.

Shares of Pumpkin Patch are now unchanged at a four-year low NZ$1.50. The stock has more than halved in value since the start of 2007.

Australia's economic growth slowed to a 0.6% pace in the first quarter while New Zealand's GDP probably dropped, figures this week are expected to show. Australia and New Zealand account for about 70% of the retailer's stores.

The company said stores in the UK and the US, its third and fourth-largest markets by outlets, have been more difficult. In the UK, retail conditions have softened since the first half and no pick-up is expected for at least 12 months. Promotions by rival stores have hurt the profit margin in the second half.

In the US, Pumpkin Patch has slowed its roll out of new stores because of what it called "very tough trading conditions." The US economy is "very difficult and likely to remain so in 2009."

By Jonathan Underhill

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