KEY POINTS:
Children's clothing company Pumpkin Patch has delivered a $27.6 million profit, with results on its home turf better than expected.
Pumpkin Patch maintained its place as a favoured growth stock with the improvements in New Zealand, Australia and its wholesale business, analysts said.
The company had seen its share price tumble from $4.48 on May 3 to a low of $3.19 on July 4, amid concerns about the impact of currency changes. It rose five cents to close yesterday at $3.30.
Managing director Maurice Predergast said the company was pushing ahead with plans to open "at least 16 stores" in the US, including the first Pumpkin Patch store on the American east coast.
The net profit of $27.9 million was down 3.2 per cent on last year and $2 million below market expectations.
But retail analysts approached by the Business Herald were agreeably surprised by Australian and New Zealand results.
Forsyth Barr's Guy Hallwright said the Australian and New Zealand results were better than expected.
Macquarie Equities' Warren Doak said the brand "has resonance with a unique client offering. It has traction and it will continue to grow".
Prendergast said he was "happy with results" especially the underlying profits out of Australia and New Zealand, where earning before interest and tax increased 9.2 per cent and 7.2 per cent respectively.
Profits from Australia were harmed by the high value of the kiwi against the Australian dollar.
Prendergast said a 6.4 per cent increase in Australian retail sales was helped by young families getting tax breaks that put money in their pockets.
Australian results contrasted with the UK, where the company recorded a loss in the second half contributing to fall in earnings from $3 million to $2.8 million.
Prendergast said the UK provided "long term opportunities"but the US market - which delivered a $1.5 million loss - was paramount for the company.
He said tax issues and quotas had hurt profits and Pumpkin Patch could not always get the mall locations that it wanted.
The company was also rolling out new stores at a time the market was decreasing rather than increasing.
Guy Hallwright said the company was going "quite hard" in the US where it opened 11 stores in 2007.
"Four stores trading profitably - it's not that great but it is still early days.
"Its wait and see on the expansion."
Warren Doak said revenue lines were ahead of forecasts and margins were up particularly in the second of the financial year.
"Its a good solid result. It is a strong brand with a strong market position and resonance with customers."
RESULTS FOR THE 12 MONTHS TO JULY 31
Operating revenue
2007 - $365.7m
2006 - $311.5m
Operating profit (Ebit)
2007 - $46m
2006 - $44.9m
Net profit
2007 - $27.6m
2006 - $28.5m
Final dividend for year
2007 - 9 cents per share
2006 - 8.5 cents per share
