Shares in kidswear company Pumpkin Patch are bucking the trend – climbing despite the company posting lower first half profits.
By 12.30pm the shares were up 9% to 91c, amid losses across most other stocks in the NZSX-50 index.
“Australia and New Zealand did better than thought,” Forsyth Barr analyst Guy Hallwright says, adding that the company’s debt was also smaller than predicted.
Earnings losses in the United States and United Kingdom dragged down results at Pumpkin Patch, which today reported a 7% drop in net profit for the half year ended January 31.
Its $9.5 million net profit was held up by stronger results in the wholesale and direct sales division.
Pumpkin Patch made a push to reduce debt and inventory levels during the half-year, with bank debt down 60% or $49 million to $32.4 million.
Some of this reduction came from a $36 million gain on foreign exchange cover and a $15 million decline in underlying stock holdings also helped.
Most of the company’s loan facilities are in place until December 2010.
Group operating revenue was up 3% to $211.2 million, with the company attributing this resilience to its strong brand. Group ebit was down 8.5% to $17.5 million.
Earnings from the volatile United States market dragged down the group results.
Although new store openings boosted US sales 43.9% to $21.7 million, the divison’s ebit loss blew out to $6.2 million from a $2.5 million loss the year before.
If the US result was excluded, group earnings before interest and tax (ebit) was up 9.5% on the previous year.
In the Australian retail market, sales were marginally down with a 5% drop in ebit reflecting a greater use of promotional specials to boost market share.
Sales in New Zealand were down 4.4%, which the company labelled a creditable result in the conditions. Ebit was down 11.6% as the opening of four outlet stores trading on lower margins came into the mix.
Wholesale and direct sales turnover was up 19.0% to $27.8 million with ebit up 28.5% to $7.8 million as favourable exchange rates helped offset the margin pressure from difficult trading conditions.
Mail order and internet business development contributed to sales growth in the Australian and New Zealand markets in particular.
Sales in the United Kingdom were down 5.6%, with the division reporting an ebit loss of $1.1 million, a substantial drop from a $100,000 profit the year before.
The company says it is difficult to predict second-half results, with a seasonal downturn expected to widen losses in the UK and US.
Pumpkin Patch declared an interim dividend of 3 cents per share.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Tim Hunter on why Veritas is doing it the hard way
- Matthew Hooton on whether Steven Joyce will be the next national leader
- Rodney Hide on why all city planners should be fired
- Nevil Gibson discusses his latest Editor's Insight on films
- The NBR crew throw around some of the week's top stories
- Rob Hosking breaks down the political and economic week that was
- "A tragedy" - David Farrar on his disappointment with Simon Bridges
- New F&P product pipeline exciting, says Macquarie senior investment adviser Brad Gordon
- Taupo Motorsport Park executive director Tony Walker on the park's rebranding
- NZIER senior economist Christina Leung on why she does not think the OCR will hit 2%
- NBR's Cameron Officer talks about the NBR Car of the Year 2015
- John Barnett on Brewer: ‘Boy, has he got a bit to learn’