3 Oct 2008

Layoffs at Pumpkin Patch as sales falter

3:25 pm on 3 October 2008

Pumpkin Patch has laid off 30 employees at its head office in Auckland in expectation the retail market will worsen.

The children's clothing company says it is a last-resort move to cut costs as a downturn in sales in the United States and Britain flows into New Zealand and Australia.

In September, the company said it was reviewing expansion plans in the US, after its profit dropped 28% in the July year.

It is understood the company wants to save $10 million on wages, which is about 11% of its total $90 million payroll. The company has 4000 employees worldwide.

Managing director Maurice Prendergast says the immediate job losses cover positions across the company. He says no more job cuts are planned, but the retail market faces uncertainty.

Mr Prendergast says Pumpkin Patch has no intention of closing stores, but will focus on manufacturing offshore.

He says the company's banking arrangements are secure, and the cost-cutting is a response to the market's downturn.

Forsyth Barr analyst Guy Hallwright says retailers are highly exposed to turns in the market, but Pumpkin Patch has held up well.

He says it is likely that other retailers are also reviewing wage costs and considering laying off employees.