Pumpkin Patch sees weaker earnings in 2009

Tuesday 18th November 2008

Pumpkin Patch, the children's clothing chain, anticipates weaker earnings from its biggest markets in 2009, reflecting deteriorating general trading conditions.

"All our markets have been extremely difficult for the first quarter and we probably are yet to see the full impact of the credit crisis," chief executive Maurice Prendergast told shareholders at their annual meeting today.

"While we will see a definite reduction in profitability we are well placed with a very strong brand," he said of the Australian and New Zealand markets.

Shares of the retailer fell 5% to 95 cents today and have dropped 65% in the past 12 months.

Prendergast said Pumpkin Patch faces the most difficult retain conditions and most volatile markets he has seen in his 15 years as chief executive. Since 2003, operating revenue has grown at a compounded average growth rate of 16%, according to his address.

The company has imposed a hiring freeze and reduced head-count at its stores in addition to the head office eliminations it has announced. It also will cut costs across the business, Prendergast said, without being specific.

Capex has been halved to $16 million this year and the company is on track to reduce inventory over the next 12 to 18 months.

By Jonathan Underhill

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