Pumpkin Patch's shares tumbled more than 9% on Friday after the company issued an earnings downgrade saying Australian competition forced it to hold end of season sales much earlier than usual.
Shares in the children's clothing retailer have been declining since March, and fell on the news that it expects full year earnings to be between $7.5 million and $9 million.
Pumpkin Patch made a profit of more than $10 million for the 2012 financial year.
Chief executive Neil Cowie says Australian retailers are aggressively bringing forward sales and promotions and it has had to follow suit.
He says there were very early sales, from mid-May, probably brought on by weak market sentiment in Australia and an early warm winter.
"It's certainly ramped up so very significant discounting started to happen, lots of promotion activity from the beginning of their end of season sales and that's had a significant impact on our Aussie business."
Mr Cowie says to remain competitive New Zealand stores have also had to discount.
He says the company is still on track to reduce its bank debt, which stood at nearly $66 million in January, to $50 million.
