Pumpkin Patch, the children's clothing retailer, says profit may fall as much as 37 per cent this year as lacklustre sales weigh on the bottom line. The shares dropped 4.5 per cent to an 18-month low.
The Auckland-based company expects to report profit of between
$16 million and $18 million
in the 12 months ended July 31, down from last year's earnings of $25.5 million.
The weaker performance reflects falling sales in Australia and New Zealand. First-half profit will be between $7.5 million and $8.5 million, down from $14.3 million a year earlier, the company said.
"In all markets many of our customers have chosen to retire debt in the wake of the global financial crisis," chief executive Maurice Prendergast said in a statement.
"It was always going to be extremely hard for us to repeat the very strong first-half performance we had in 2010 with the challenging conditions we have faced in all markets since then."
Pumpkin Patch primed investors for a pessimistic result in November, saying trading conditions had been tough in Australia, the company's biggest market, and consumers remained cautious on both sides of the Tasman.
The shares fell to $1.50, the lowest level since July 13, 2009, having dropped 19 per cent last year.
They've slumped by more than two-thirds since their high in January 2007.
The profit warning comes a day after clothing chain Hallenstein Glasson Holdings said first-half profit would fall as much as 18 per cent on weaker sales at its Glassons outlets.
New Zealand retailers have struggled over the past year as local households use historically low interest rates to repay loans rather than take on debt to boost spending, and vendors have had to wear a hike in the goods and services tax to attract sales.
Government data showed core November retail sales unexpectedly shrank, while yesterday's credit card statistics showed total billings fell 1.4 per cent to $2.97 billion in December.
Prendergast said the company was able to use a strong balance sheet to "ride out this short-term trading weakness" and will push on with store expansion plans in Australia, Ireland and the UK.
