Pumpkin Patch has delivered another disappointing full-year result, pointing to declining sales, the loss of key wholesale customers, an increase in finance expenses, and a full-year net loss of $9.1 million dollars, which is significantly more than its guidance.
The children's clothing retailer warned last week that its bottomline for the year ended in July would be hit by unforeseen risks to its working capital and additional costs associated with underperforming stores, which saw its gross profit fall 31 percent to $11.7 million, from $17 million last year.
Sales fell 1 percent to $238.5 million over the year earlier, with Australia outpeforming the rest of its markets.
The company says wholesale and online sales fell 7.5 percent outside of New Zealand and Australia, particularly in the United Kingdom and United States, where it no longer has retail stores.
The chair of Pumpkin Patch, Peter Schuyt said the Australasian business performed well, despite the impact of a strong New Zealand dollar that had a significant impact on overall profitablility.
The company said it will continue to face currency challenges in the current 2016 financial year and that its online sales will be consideraly below last year's.
In terms of the financial stability of the company, Mr Schuyt said Pumpkin Patch has sucessfully concluded discussions with its bank, after demonstrating real progress to address underlying problems with the business, reducing debt by $20 million, with improving cash flows.
He said Pumpkin Patch now had banking facilities in place to the end of 2017, which is appropriate to the company's circumstances.
The incoming chief executive, Luke Bunt, who takes over from Di Humphries in one month, said the company still has many complex and challenging operational issues to address, but good progress has been made.
He said a review by the company indicates it has a good brand and strong customer loyalty.
"The review has underscored that Pumpkin Patch's focus must come back to its customers. . . To achieve this, investment will be required in product design, all our channels to market and on various customer communication mediums," Mr Bunt said.