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Pumpkin Patch pulls pin on UK operations

Listed children's clothing retailer Pumpkin Patch (PPL) have called in administrators to take over its loss-making operations in the United Kingdom.

In an announcement to the NZX this morning chief executive Neil Cowie said the 36-store UK operation was loss-making and worse news was on the horizon.

“The return on investment from the UK retail operation has not been acceptable and the current trading losses being generated only accentuate this. The economic environment in the United Kingdom and in wider Europe is extremely difficult and we believe it is going to get worse before it gets better. Therefore we expect the UK operation would continue to make losses for some time to come," he said.

Mr Cowie said a decision on the future of stores in the UK was now in the hands of administrators, but conceded a complete shut-down was possible. "We anticipate that if they cannot find any alternative options some or all of the UK stores will be closed," he said.

Mr Cowie said the move would costs PPL up to $5 million in cash and result in an additional $25 million impairment.

Shares in PPL closed yesterday at 70c.

More by Matt Nippert

Comments and questions

I would say they are hurting a lot in NZ also as some of the latest SPECIALS they have done are highly reduced for everything which I believe they have never done in the past and to me the consumer just points to the fact that their stuff is to overpriced normally for them to do this

This is a catastrophe for PPL.

I dispute this is solely down to the economic environment in the UK. There are plenty of brands in the UK for children's products and clothing that are surviving, and even growing in the UK.

This isn't Greece or Italy either. The UK still has discretionary spending.

What actually is more likely is that the stores suck, the products are invisible to the people who should be buying them, and the products are no longer special. The brand means nothing to people in the UK as well.

I was in Melbourne in October, and marvelled at how awful the Pumpkin Patch racks were in the department stores, while Gap, Ralph Lauren and other big brands had very impressively arranged goods in easy to spot places.

PPL is not long for the world scene - that's my pick. They will retreat back to NZ and maybe Australia, to become a smaller company where their brand is respected, rather than ignored.

In all likelihood, they will be picked up cheaply by Hallensteins Glassons or another NZ clothing company who will gut the PPL head office, find cost savings, and run the Pumpkin Patch brand as a nice niche product in their overall lineup of clothing goods.

Agree to all except the most likely purchaser is Farmers - Pascoes ( i.e the Normans) who really know retail

Yes you are right. I just thought of the Normans, who coincidentally were the last people to successfully invade the UK.

Haha - like that one

Rod Duke will be hating life - how much has he lost with these chumps?

He's probably annoyed with his wife too - if his house is anything like mine she probably told him early on that their stuff is awesome and he thought he'd invest off the back of that recommendation. Problem being that when the rest of the market caught up and passed PP it was a lot easier for his wife to stop shopping there than it was for him to reverse his decision and offload his stake. Bummer

Either that, or a private equity firm who knows how to turn around failing retail will make an offer at 40c a share that gets accepted by hurting and aggrieved shareholders.

Finally have a reason to go into PPL stores. Just overpriced crap that isn't really needed. Better stuff, better selection and cheaper prices in Farmers.

Retail is struggling the world over, especially Fashion and garment retailing. Think Colarado etc. The model is somewhat dated for those using old tactics, or trading at the mid to top end of a market.

Consumers are trimming spending, those that could afford to shop at PPL may well be reducing their spend at PPL and buying more general children's garments at Farmers / K Mart etc.

Like any retailer, or business for that matter, PPL need to have a relevant offer to a broad range of consumers, and via a range of channels. Think of the cosmetics industry, how they operate kiosks in major department stores, I can see a PPL kiosk and range in every Marks and Spencers store...... perhaps every K Mart worldwide, WOW, what an opportunity. PPL Babes PPL tots, etc etc.....

Those that continue to do business in traditional ways, will suffer the same fate is the traditional business........

Rental in the UK is history. It is all online now. its approx 25% of all consumer expenditure at the moment. Pumpklin Patch will still be able to reach within the UK market and does not need the expensive stores. Be warned retail is about to follow the same trend in Au & NZ its all online!!

Agree merchandise has been poor but this can be overcome.

Aussie is still in the middle of a baby boom too

I could never work out how PPL had the audacity to simultaneously expand in to the UK and US. Without wanting to be a smart arse (because I also like to see ambitious moves) I thought this result would happen at the time. Interesting who headlined this growth initiative. It was heralded as visionary by at least one management magazine at the time.

Easy to answer - some Muiron put them up to it.

In fairness to Rod Duke, PPL was only a hobby compared to what he is doing with Briscoes - which in my opinion is truly magnificent.

He will be upping the smokes to 3 packs a day though.

There are many examples of successful operations in NZ who attempt to clone them overseas, and fail.
The only ones that ever work are where the original entrepreneur does the offshore deployment, recognises the differences in the market and adapts. Cloning only works in well-established formulated industries like mobile networks, fast food etc.

Agree with you. I'd just note that cloning rarely works in fast-food. Even McDonald's adapts massively by market and, as far as practicable, by location.

I like your original entrepreneur reference - as the transition and translation requires a grounded understanding and molding of the business model - without bastardizing the brand.

So many have found ,going overseas tough. micheal hill, the wharehouse ,and many more.