Pumpkin for South Africa patch

Pumpkin Patch is poised to sign a wholesale deal to supply children's clothes to a partner in South Africa, and is exploring deals in Indonesia, Singapore and Poland.

But the company told shareholders at its annual meeting in Auckland yesterday that new wholesale relationships would not generate noticeable earnings until at least 2007.

Executive chairman Greg Muir said after the meeting that it took three or four years for wholesale deals to deliver. When the wholesale business took off in 2004 and 2005, the small team had to focus on existing clients, not new business.

"We're only just going out this year and talking to new accounts," he said.

South Africa and Asia had great potential, with small-scale trials going on in Indonesia and in Singaporean department store Tang's.

Pumpkin Patch clothes are sold in 11 countries, a figure which could swell to 15 if deals were done in all four of the countries being considered.

Muir told shareholders he would not give guidance on the company's half-year result, given Pumpkin Patch was just entering the crucial Christmas trading period. But he reiterated comments the company made in September, that it expected the overall retail trading environment in New Zealand, Australia and the UK to be less buoyant than a year ago.

Higher interest rates and petrol prices would take their toll. But the company's store roll-out programme, brand development strategy and the increase in customer awareness for the Pumpkin Patch brand should generate another strong trading performance, he said.

"It will be a good year this year but it's not going to be as outstanding as last year."

Analyst consensus forecast is for the company to report a net profit after tax of about $29 million for the year to July 2006. Muir indicated he was comfortable with that, saying the company "hadn't given any negative comment" on the forecast.

Pumpkin Patch is also continuing to expand overseas in its own right, not just through wholesale partners. Managing director Maurice Prendergast said the company had now opened three stores in the US, two in Los Angeles and one in San Francisco, and planned a fourth. "Feedback from customers has been positive," he said.

The company has had a setback in the US with the takeover of Marshall Fields. "We have gone from Marshall Fields, which we want to be in, to Macy's, where we are not so sure," said Prendergast. Pumpkin Patch has opened 11 stores in four countries to date and is on track to meet its plan of opening 22 stores this year.