KEY POINTS:
Children's clothing company Pumpkin Patch has reported an annual net profit after tax down 3.2 per cent to $27.6 million.
That compares to $28.5 million last year and was made on total operating revenue up 17.9 per cent to $365.7 million for the year to the end of July.
A final fully imputed dividend of 4.5 cents per share was declared, taking the total dividend for the year to 9cps, from 8.5cps the year before, Pumpkin Patch said today.
An increase in the number of stores opened in the year, and a greater proportion of the more expensive United States and British stores in the mix, led to an increase in depreciation to $14.5m from $10.5m.
Increased bank borrowings to pay for the expansion of both existing and new markets, combined with increased interest rates led to interest costs increasing to $3.5m from $600,000, the company said.
Quota costs in the US and European Union markets were $4.2m, up $800,000 on 2006. Before quota costs, net profit after tax was up 0.8 per cent to $31.8m.
After recognising the $4.2m in quota costs, earnings before interest, tax, depreciation and amortisation (ebitda) was up 9.4 per cent to $60.6m, while earnings before interest and tax (ebit) was up 2.6 per cent to $46m.
Despite facing a high New Zealand dollar for most of the year all segments generated sales growth both in NZ dollars and local currency terms, Pumpkin Patch said.
Strong sales performances in Australia and New Zealand reflected the strength of the Pumpkin Patch brand in those markets.
Sales growth also came from the developing United States and British retail markets and from the wholesale division .
During the year a total of 35 stores were opened -- 13 in Australia, 11 in the US, seven in Britain and four in this country -- taking total store numbers to 200.
This year the company expected to trade strongly in Australia and New Zealand , Pumpkin Patch said.
A continuation of store growth and margin retention would be the platform to drive earnings for reinvestment in new markets.
While interest, store opening costs and local market development costs would continue to have an impact on financial results in the short term the directors and management team were confident current strategies would the best long term financial outcomes, the company said.
In Australia, sales from retail stores rose 6.4 per cent in the latest year to A$156.9m ($187.2m), while Australian retail ebit was up 9.2 per cent to $35.5m.
Trading conditions were solid throughout the year with a noticeable improvement in sales performances in the second half.
In this country, retail sales grew 7.8 per cent to $64.3m. Again sales performances improved in the second half despite fickle market conditions, the company said.
An ongoing focus on inventory and margin management ensured ebit grew 7.2 per cent to $12.7m.
British retail sales grew 29.5 per cent to £19.6m ($55.9m).
Ebit including quota costs was $1.2m, down from $1.8m a year earlier, and continued to be affected by new store opening costs and investment in support infrastructure needed to manage a growing network of stores, Pumpkin Patch said.
In the US, retail sales rose 236.8 per cent to US$12.8m ($18.2m).
Ebit loss after quota was $1.5m compared to an ebit loss of $400,000 last year.
Wholesale and direct turnover was up 26.7 per cent to $50.4m.
Ebit including quota was up 20.7 per cent to $14m.
Research was under way on various European markets to identify future opportunities.
- NZPA
