At its annual meeting last year Pumpkin Patch warned that poor Christmas trading could result in a breach of banking covenants and the company was undertaking a capital review, with Goldman Sachs taken on as an adviser.
"Since that time certain third parties have proactively indicated their interest in Pumpkin Patch," the company said yesterday. "The board believes it is in the company's interests to seek formal proposals in respect of either an acquisition of the company or in respect of recapitalisation."
There was market speculation earlier this year that Briscoe Group managing director Rod Duke - who has a 10 per cent stake in Pumpkin Patch and a seat on its board - might try to take control of the retailer.
Duke would not confirm or deny the rumours.
Pumpkin Patch chairman Peter Schuyt declined to comment on whether Duke was one of the interested parties.
The third parties - which he declined to name - were showing a serious interest in the retailer, he said.
Schuyt said Pumpkin Patch would benefit from additional capital and expertise that could come with a new ownership structure.
"We've got parties who are interested who we believe could potentially add a lot of value to the business," he said.
Schuyt said yesterday that Christmas trading had been positive and the company was comfortable with its forecasts for the remainder of the financial year.
"We'd be obligated to advise the market if there was any forecast breach [in bank covenants] and obviously we haven't done that," he said. "The business risk is still there, but bank debt's down, operating cashflows are good and the relationship with the bank has been and continues to be good."
Pumpkin Patch said first-half net profit increased to $749,000 from $106,000, while revenue rose to $122 million from $119.3 million in the same period a year earlier.
The company said full-year normalised earnings before interest, tax, depreciation and amortisation (ebitda) would be similar to last year's $14 million.
Chief executive Di Humphries said the competitive environment remained intense, but the retailer had achieved "solid" same store sales growth of 5.7 per cent in Australia and 1.8 per cent in New Zealand.
"In addition, traffic on our websites increased by 10.3 per cent," Humphries said.
However, trading conditions in Pumpkin Patch's international business had been difficult, leading to a sales decline of 1.2 per cent, she said.
Pumpkin Patch
Six months to January 31
Revenue
2015: $121.9m
2014: $119.3m
Net profit
2015: $749,000
2014: $106,000
Net bank debt
2015: $52.7m
2014: $53.2m