Pumpkin Patch slices into US pie

Greg Muir

Pumpkin Patch's United States expansion is going so well 10 more stores will open there by the end of the year.

Reporting a 16 per cent increase in half-year profit yesterday, executive chairman Greg Muir said early indications from the trial stores in Los Angeles and San Francisco were so promising the company had plans to bring the count up to 13.

"That [decision] gives you an indication of the confidence we are getting from the trial," said Muir.

This year, the children's clothing retailer will also add six new stores in Australia, two each in Britain and New Zealand. It now has a total of 153 stores.

After-tax profit for the half-year ended January 31 was $14.6 million, up 16 per cent from a year earlier.

Revenue was $151 million, up nearly 9 per cent from last year.

Muir said given the slump in discretionary spending in Australasia in that period the result was pleasing.

Like most retailers, Pumpkin Patch expects flat trading conditions for the rest of the year but believes its strong brand will help it deliver good results despite the spending downturn.

During the six months, local retail sales grew to $30 million, up 2.7 per cent on the year before. Sales at the Australian stores were nearly $74 million, up about 5 per cent. UK stores delivered revenue of $19.7 million, a 45.4 per cent increase on the previous year. Results from the wholesale division showed a 12.5 per cent increase in sales to $18 million.

Despite the double-digit profit growth, Pumpkin Patch shares were down 8c to close at $3.24 yesterday.

Forsyth Barr retail analyst Guy Hallwright said the retailer "marginally" missed his net profit forecast of $15 million.

When asked if the company's expansion plans were too ambitious, Hallwright said this year's store growth was on par with other years. "It's an experienced company, growing rapidly. It's not that surprising. It's nothing that raises warning bells."

He forecast annual after-tax profit to be between $28 million and $29.5 million. Pumpkin Patch does not provide profit forecasts.