Markets react positively to Pumpkin Patch store closures
The markets have reacted positively to the news that NZ-listed Pumpkin Patch is to dump 20 of is badly performing US stores.
The children’s clothing label has decided to close 20 of the 35 stores in the US as the stores continued to under perform and were causing problems with the company’s bottom line.
Pumpkin Patch’s share price was up 9.6% at 11.53 today after a busy morning trade. The shareprice now sits at $1.48 – still considerably below the 52-week high of $1.64.
It is not surprising that the reaction to the news has been so good as there have been calls for Pumpkin Patch to rid itself of some of its US interests for sometime as these operation had been affected its bottom line.
Pumpkin Patch’s US operations recorded a net profit loss of $8.9 million even though retail sales were up 50.6% to $27.3 million for the half year ended January 31.
Had the US operations ebit not been included in the group’s results for this period, its ebit would have been up 9.5% rather than down 7%.
The news that the company has also managed to reduce debt by 60% and now forecasted that its year end bank debt would be lower than the predicted $30-40m. Good news in a market where there is a high degree of uncertainly to how long the current economic downturn will last.