Member log in

Pumpkin Patch second retailer to cite Australian rivalry hurting profit

Children's clothing chain Pumpkin Patch says full-year profit may drop as much as 35 percent in the face of intense competition in Australia, becoming the second local retailer this month to cite tough times across the Tasman. The shares tumbled to a 16-month low.

Profit after tax, excluding reorganisation costs, is expected to be $7.5 million to $9 million in the 12 month as ending July 31, down from $10.1 million a year earlier.

While trading in the winter season had been tracking to expectations, over the last five weeks there had been "a significant increase" in promotions, with major retailers "entering end of season sales much earlier and far more aggressively than normal", the company says.

"This will impact retail earnings for the remainder of the FY13 financial year."

Pumpkin Path shares fell 8.1 percent to 79 cents. The shares are rated a 'hold' based on the consensus of four analysts polled by Reuters, with a median price target of $1.35.

The retailer's earnings were also hurt by changes to delivery schedules by its wholesalers, with a number of deliveries typically made in July being put back to August and September.

"These changes are only timing in nature, however full-year after tax earnings for the international business unit will be impacted by $600,000," it says.

The profit warning comes two weeks after clothing retailer Hallenstein Glasson Holdings said full-year profit may drop as much as 12 percent after a slow start to winter hurt returns from its Glasson stores in Australia, where rivals have cut prices aggressively.

Earlier this month, Australian government figures showed retail sales rose 0.2 percent in April, missing estimates of 0.3 percent. That followed a 0.4 percent decline in March.

(BusinessDesk)

Comments and questions
3

It seems to me that PP and HG are crying into their beer over hard-nosed Australian competition.
Suck it up, boys.

Even at 75c, it is still trading at over 15x P/E at the midpoint of its range - which is higher than most of its peers! Glad I sold.

It's called competition -- get over it...