KEY POINTS:
Children's clothing company Pumpkin Patch is reporting half year net profit after tax (Npat) down 23.7 per cent to $10.2 million, under new international accounting standards.
Earnings in the six months to the end of January were affected by higher quota costs, higher interest charges, and a higher effective tax rate when compared to the first half of 2007, the company said today.
Total operating revenue increased 13.5 per cent to $205m, while earnings before interest, tax, depreciation and amortisation (ebitda) were up 0.7 per cent to $27.9m.
A fully imputed interim dividend of 4c per share would be paid, compared to 4.5cps a year earlier.
Australia and New Zealand again delivered strong sales performances reflecting the strong brand awareness in those markets, chief executive Maurice Prendergast said.
Sales in the developing US and British markets grew through new store openings.
While all statutory and stock exchange reporting had been prepared under the new international standards, to help comparisons to past financial periods figures referred to in today's commentary were prepared under previous New Zealand accounting principles.
On that basis, group Npat was down 22.3 per cent to $12.1m, while ebitda was down 1.7 per cent to $29.9m.
Australian retail sales were up 14.2 per cent to $98.7m, reflecting Pumpkin Patch brand strength, a strong summer range, generally buoyant retail environment and a more favourable average exchange rate.
Australian retail earnings before interest and tax (ebit) were up 27.8 per cent to $20.8m and as a percentage of sales were up 2.3 per cent to 21.1 per cent, Mr Prendergast said.
During the period two new stores were opened in Australia, taking the total to 104.
Retail sales in this country grew 7.2 per cent to $33.3m, a strong performance considering widely-reported general retail softness before Christmas, he said.
Ebit grew 16.8 per cent to $6.9m and as a percentage of sales grew 1.7 per cent to 20.8 per cent.
The ebit growth was driven by a strong summer range, a focus on inventory and cost management and a better overall performance from the stand alone Urban Angels stores.
No new stores were opened in the period, while one Urban Angel store had since been merged into an existing Pumpkin Patch store, with store numbers now at 50.
British retail sales grew 20.9 per cent to £12.8m ($31.6m) and 13.5 per cent in NZ dollar terms to $34.3m.
General retail softness seen in the second half of 2007 had carried over into the current financial year, with major operators continuing to report disappointing sales results, especially when compared to the buoyant first half of 2007, Mr Prendergast said.
During the period three new British stores were opened taking the total number to 33.
Although the British retail environment was likely to remain soft for the rest of the year, customer and brand awareness continued to grow, Mr Prendergast said.
In the US, retail sales were up 61 per cent to US$11.4m, or in NZ dollar terms up 45.1 per cent to $15.1m.
During the period 10 stores were opened in the US, taking the total to 28.
Ebit had been significantly impacted by the opening costs of the 10 new stores and investment in the local management team made in the past year.
The company said it believed it now had in place the local management structure needed for the growth of the store network for the foreseeable future.
US customers were on average buying more items per visit than those in any of the company's other markets.
The current US retail environment was delaying store sales growth, so short term earnings would remain subdued.
More cautious US expansion was planned in the short-term, with six stores expected to open before the end of the financial year. Sites for 2009 were being reviewed.
In the wholesale and direct division, turnover was up 4.8 per cent to $23.4m.
Good sales growth was achieved in local currency terms, but exchange rates affected that growth when converted back to the NZ dollar.
Ebit excluding quota for the year were up 1.6 per cent to $7.3m, while including quota it was down 9.3 per cent to $6.1m.
Mr Prendergast said the company continued to research European markets and to develop strategies for some of those.
Development of mail order and internet businesses in Britain and the US was showing good early signs with solid sales growth coming from both markets albeit off a small base last year.
Pumpkin Patch shares were up 1c to $1.95 at lunchtime, having ranged between $1.90 and $4.66 in the past year.
- NZPA
