Pumpkin Patch CEO resigns, shares drop

Maurice Prendergast

UPDATED: Shares in children's clothing retailer Pumpkin Patch have slumped more than 10% after the company announced a 50% fall in underlying profit and the resignation of chief executive Maurice Prendergast.

Pumpkin Patch said its underlying net profit after tax, excluding non-recurring reorganisation costs, was $12.6 million, down 50.5% from $25.5 million a year ago, but in line with guidance previously advised to the market.

The audited net result showed a loss of $1.8 million, reflected in part by a loss from discontinued operations of $9.45 million.

The company said Mr Prendergast would leave the company at the end of the year.

Neil Cowie, the company’s current chief operating officer, has been appointed chief executive designate.

The company said no further dividend would be paid as it looked to pay down debt.

The market didn't take the news kindly. Shares in Pumpkin Patch [NZX:PPL] slid 9c or 10.1% to 80c following the announcement.

Mr Prendergast said Pumpkin Patch faced a series of major challenges during the year. Difficult trading conditions in all markets, natural disasters, and political unrest in the Middle East, and a high NZD exchange rate affectd trading performances. In addition low inventory levels at the start of the year led to a poor six week trading period in August and September 2010.

Total group operating revenue for the year was $356.8m, down 7% (1H11 down 10%; 2H11 down 3%).

Soft trading conditions in all markets and the high NZD are expected to continue to create challenges in the 2012 year. However the company said it has started the new financial year with much better inventory. 

“While we are naturally disappointed with the overall group result you just have to look at the large scale store closures and restructuring plans announced by a number of the major international and Australasian apparel retailers as an indication of how tough it has been," Mr Prendergast said.

He highlighted the Pumpkin Patch online business as one of the successes for the year saying online sales were up significantly with good growth across local and international markets.

"We are currently investigating a number of initiatives to leverage off our existing online capabilities to grow existing markets and to develop new online opportunities," he said.

On Mr Prendergast’s resignation, chairwoman Jane Freeman said he would remain in office until the end of the year.

"Maurice has decided that the time is right for him to hand over the CEO role so he can focus on a number of other business and personal activities. While he is leaving his executive role we are very fortunate to have him staying on as a director and of course he will remain a significant shareholder,” she said.

Maurice Prendergast said while the decision was not easy, he was leaving the business in good hands.

“Even though the current trading environment is tough the company has some very exciting opportunities on the horizon and is well positioned to take advantage of those."



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Bring Back Greg Muir!

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Wow, PPL has had some massive changes at the top lately.
Look at the share price dive - what is going on?

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Thank GOD they are getting into online sales. All they need to do now is start selling on Trademe.

Haha bring back Greg Muir?? This guy is tainted after being the CEO for the filthy Hotchin/ watson/ hanover boys!

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Muir may be tainted but he is also talented.

Would you rather have a squeaky clean doofus who loses you money or a smart guy who once worked with someone you do not like?

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Would you rather have an honest ceo with lower profit or a dishonest, fraudelent ceo with higher profits?

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I agree with the above. Greg Muir was a great ceo of the warehouse etc. It is of disbelief why he would do what he has done. Surely he had enough money not to scoop as low as he has done with Hanover group?? or maybe hotchin & hanover just offered him too much money?

The future of Pumpkin Patch is not Heavy growth. Internet Sales will be there best bet (Worldwide sales).

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Defamatory comments unwelcome – Ed

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PPL is a joke a t the management level - the executive is very heavily renumerated by shares which they picked up during the hey days (remember when the share price was well north of $2). There has been no fresh blood in key positions...two execs sit on the board.... - lets hope the board brings in an outsider to inject fresh ideas and a broom to get rid of some of the dead wood. Clearly,there has been bad strategy and execution and poor follow through - long before the high dollar.

THIS COMMENT HAS BEEN EDITED - ED

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Yeah right...."While we are naturally disappointed with the overall group result you just have to look at the large scale store closures and restructuring plans announced by a number of the major international and Australasian apparel retailers as an indication of how tough it has been" .....okay so I'm looking at Kathmandu and their great profit announcement....looks like a fantastic result to me...run by a CEO that has a good understanding of retail, expansion and controlling costs.

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Wow the share price today is the same as it was at the bottom following GFC. Must be one sick company when you look under the bonnet.

Get the execs off the board, bring in some talent at Board Level (if there is any in NZ), then hire an exec team who will provide shareholder value.

Any one who has worked for, with, even associated with Hotchin, Watson, Somers-Edgar and the list goes on and on need not apply.

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Rod Duke and Jan Cameron who are both large shareholders in PPL and have run successful profitable retail businesses should take over

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That's what I've been holding on to mine - sans dividend! - for so long for :)

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no dividend.... :(

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Guilt by association is no guilt at all.

He was an excellent CEO of PPL and shame on the spineless shareholders who were caught up in a McCarthy-type fear and smear campaign.

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So................all that being said, would you buy shares in PPL right now?

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The problem that I see is that only a very foolish parent would want to buy the over-priced gear that is in Pumpkin Patch.... you can get similar stuff in farmers for about 1/2 the price or less.

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