Salt Funds Management has taken advantage of the poor reception to Pumpkin Patch's first-half results to lift its stake from below 5 percent to 5.6 percent.
On Wednesday, Pumpkin Patch reported a 97 percent slump in first-half net profit to just $106,000, reflecting heavy discounting, major supply chain disruptions and restructuring costs.
The children's clothing retailer's year-earlier net result for the six months ended January was $4.7 million.
Excluding the restructuring costs, the result was still down nearly 80 percent.
Sales were down 16.5 percent and the supply chain disruptions were due to the failure of two core suppliers and to major flooding in a key supply region in China.
Salt managing director Paul Harrison says when Pumpkin Patch shares fell to a record low at 55 cents after the result, his firm thought they were too cheap to resist.
He says they like the direction in which Pumpkin Patch chief executive Di Humphries is taking the brand and she appears to have fixed the company's supply chain issues and put in place a more robust system.
Mr Harrison says they also like Pumpkin Patch's multi-channel marketing strategy with both bricks and mortar and online stores.
