Pumpkin Patch should see gain from smaller US presence

Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.

Launch Radio player

Pumpkin Patch might see some small local earnings lift in its interim results tomorrow as consumer confidence slowly picks up, but cutting back its US presence should have the biggest impact on its bottom line.

Operating profit is expected to be well up on last year, with Forsyth Barr analyst Guy Hallwright forecasting a 43% rise to $13.6 million, while First NZ Capital’s Sarndra Urlich is even more confident with a $14.5 million forecast.

But both analysts agree the sharp pulling back on its US expansion plans will be the key earnings driver for the past six months.

The children’s clothing retailer confirmed in June that it would be shutting 20 of its 35 US stores, targeting those outlets that had failed to gain traction in the past two years.

The US stores had been a regular drain on the company’s finances, with import quotas and the prolonged financial crisis in the States seeing consistent losses.

One-off costs associated with the closure have already been absorbed by the company after it posted a $26.7 million annual loss in September.

Closer to home, the slow return of consumer confidence should see New Zealand sales remain steady, although the recent strength of Australian sales is expected to continue, although margins should be flat on last year.

At its annual meeting in November, the company told shareholders Australia remained a major target for growth, with plans to build another 30 stores across the Tasman.

There is unlikely to be much improvement in its UK stores, although writedowns carried out last year should reduce depreciation and cut back on the ebit loss in that region.

Pumpkin Patch’s wholesale and direct sales division may also be down on last year’s result, mainly due to the stronger New Zealand dollar and squeezed margins.

As always, the company’s out look will be closely watched to see if the post-Christmas sale period has stabilised or if it has continued to be volatile.

A good result in this area may spark more interest in the company’s stock, which has been relatively subdued over the past several months.

While the announcement of its US plans in late June saw the share price (NZX:PPL) rise quickly, it has been trapped just beneath the $2 since early September.


This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7699 0.0019 0.25%
AUD 0.9830 -0.0036 -0.36%
EUR 0.7113 0.0012 0.17%
GBP 0.5146 0.0016 0.31%
HKD 5.9690 0.0027 0.05%
JPY 91.6120 0.2980 0.33%

Commods

Commodity Price Change Time
Gold Index 1202.7 5.690 2015-04-17T00:
Oil Brent 63.5 1.740 2015-04-17T00:
Oil Nymex 55.7 -1.000 2015-04-17T00:
Silver Index 16.2 -0.050 2015-04-17T00:

Indices

Symbol Open High Last %
NZX 50 5881.8 5884.7 5881.8 -0.34%
NASDAQ 4966.1 4974.1 5007.8 -1.52%
DAX 11942.4 12019.8 11998.9 -2.58%
DJI 18102.6 18102.6 18105.8 -1.54%
FTSE 7060.4 7093.5 7060.4 -0.93%
HKSE 27808.2 27969.4 27739.7 -0.31%
NI225 19810.4 19815.2 19885.8 -1.17%