Pumpkin Patch enjoys better second half

Managing Director of Pumpkin Patch, Luke Bunt. Photo / Nick Reed

Pumpkin Patch has maintained its earnings guidance for the year ended July 31, and says it has seen a "pleasing second half performance", though it is still considering further restructuring and is looking for more "flexibility" from its lenders.

Normalised earnings before interest, tax, depreciation and amortisation (ebitda) were between $2.8 million and $3.4m in the year, a range the retailer initially gave with its first-half results announcement in May and affirmed in June.

Pumpkin Patch reported normalised ebitda of $11.7m in the 2015 financial year and $17m in 2014.

"Consistent with the company's strategic plan, the company is continuing to assess whether further restructuring provisions are required in respect of any underperforming assets," Pumpkin Patch said. "As part of the annual review of its banking facilities, the company is in ongoing discussions with its bank on the suitability of the facilities' terms and conditions.

"Those discussions will occur in the context of the current operating environment and capital expenditure requirements associated with the company's strategic plan. Some additional flexibility is being sought. The review is anticipated to be completed in mid-September."

The retailer said it had second-half online sales growth of 44.1 per cent in Australasia, and same-store growth of 4.2 per cent in Australia and 5.4 per cent in New Zealand, compared to the same time in 2015, which "contrasts significantly with the challenges experienced in the first half". Sales fell 16 per cent to $102.8 million in the first half from a year earlier, with online sales down 13 per cent. It posted a $6.8m loss in the first half, compared to a $700,000 profit a year earlier.

In his address to shareholders last November, managing director Luke Bunt said 2016 earnings would be "significantly below" 2015.

Yesterday, the retailer said it had "significantly improved its inventory age profile, and new season inventory is now at levels more appropriate to support all sales channels going forward". It had $49m in inventory as of July 31.

The company's shares closed up 4.5c yesterday at 12c.

BusinessDesk