Pumpkin Patch posts $26.7m loss on US exit costs

Pumpkin Patch chief executive Maurice Prendergast. Photo / Martin Sykes.

Pumpkin Patch, the children's clothing chain, posted a full-year loss on costs to exit 15 unprofitable US stores and a decline in earnings from its biggest markets of Australia and New Zealand.

The net loss was $26.7 million in the 12 months ended July31, from a profit of $17 million a year earlier, the retailer said in a statement today. Impairments and one-time costs related to its US restructuring amounted to $39.9 million, it said. Excluding discontinued activities and one-time items, earnings fell 4.2 per cent to $18.5 million.

Investors welcomed the company's decision to pull back from its US expansion in the midst of recession, allowing it to limit losses while concentrating on stores that could demonstrate their earnings potential.

The US changes "provide shareholders with better financial outcomes in the near term and create a more sound foundation" for longer term development, chief executive Maurice Prendergast said.

The shares climbed almost 3 per cent to $2.08 and have soared 11 per cent this year. Prendergast said major achievements during the year included slashing bank debt by 77 per cent to $18 million and trimming inventory by $42 million to $80 million. Operating revenue rose 3.2 per cent to $412.6 million.

In its biggest market of Australia, EBIT slid to $38.5 million from $41 million, reflecting increased spend on marketing. New Zealand EBIT fell to $11.1 million from $12.6 million. EBIT from wholesale and direct sales climbed 6.7 per cent to $16.6 million.

-BUSINESSWIRE