Pumpkin Patch cuts directors' fees, warns of hard times ahead
Pumpkin Patch has shaved $130,000 or 35% off directors fees as its board warns hard times are continuing at the children's wear retailer.
Chairwoman Jane Freeman, whose annual fee will be cut back to $85,000, announced the fee cut at the company's annual shareholders meeting today.
A departure from some of its listed company peers, Pumpkin Patch has reduced annual fees for its four directors to $50,000 each.
The move follows a decision to freeze salaries at the Pumpkin Patch head office this year and cut 55 jobs at across the company.
“Some hard decisions were made in 2011 and we believe some more hard decisions will need to be made in 2012,” Ms Freeman said.
Shares in Pumpkin Patch are trading unchanged at 65c today.
Ms Freeman said this year had been one of the most challenging for the company.
"Not only did we face difficult trading conditions in all our markets and a continuation of the higher New Zealand dollar, we also had to deal with a number of other challenges such as a series of natural disasters and civil unrest in key markets around the world.
"A number of very well known international retailers have fallen by the way side over the last year and many more have announced major reorganisation and store closure programs. It has been a very tough time for the industry."
Shareholders were told the company's disappointing financial result had prompted a full operational review of all parts of the business, underway over the next 12 months.
"We are well aware of the fact that the results in recent years have not been good enough and that you are expecting us to make changes that improve both short and long-term results," Ms Freeman.
Retiring chief executive Maurce Predergast told shareholders Pumpkin Patch was in "almost the near perfect storm" and the latest full-year result (trading profit of $12.6 million) reflected that.
"Trading conditions in all our markets deteriorated as the year went on and continue to be very challenging. Add to this much higher product costs and a stubborn New Zealand dollar and it became pretty obvious 2011 was going to be much more difficult than the very good result we had in 2010."
While soaring raw cotton costs had the biggest impact on the company's full-year result, the price was starting to fall and the company was now seeing some relief in product purchasing for the winter range, which starts selling in February.
"Unfortunately the cotton hangover will again affect our results this financial year," Mr Prendergast said.
Plans to close the doors on the company's US stores, announced in June, had seen four store closures, with the balance to close in January.
Although the home markets did not have the unemployment problem facing the US and Europe, it did have a customer used to getting a bargain, said Mr Prendergast.
"We are , at home in Australia and New Zealand, faced with a consumer that is shell shocked by the economies around the world.
"We do need to address our product so that the customer is getting from our brand the sense of value they are wanting.
Pumpkin Patch is now focussed on pulling "every trick out of the hat" to maximise sales over the Christmas period.
On a brighter note, online sales continued to grow across five countries, with year to date sales up more than 40% and expected to be an important earnings generator going forward.
Earnings guidance for the current financial year will be provided with the half-year result in March.