US credit crunch blamed for Pumpkin Patch's US failure
We moved too fast, our timing was lousy and we fought the toughest economic recession to hit retail markets, was the line Pumpkin Patch’s chief executive Maurice Prendergast delivered to shareholders today on the company’s failure in the US.
The children's clothing retailer held its annual general meeting (AGM) in Auckland this afternoon, where Mr Prendergast and chairman Greg Muir discussed the pain felt in worldwide retail markets over the past 18 months and how it has affected the company’s bottom line.
But Mr Muir said unlike many of its (unnamed) competition, Pumpkin Patch has not paid directors bonuses while the company has been suffering. There has been a dramatic drop in consumerism and consumer debt across the world over past year. Mr Muir said both UK and US markets had strongly challenged the company and its board.
Mr Prendergast said he had wanted to close all 90 of the company’s US stores but had been advised against such a move by the board, which strongly supported the company's presence in the US, and gave him the confidence to “ride out the storm.”
A representative of the Shareholders' Association questioned Mr Prendergast on the lessons he had learnt through the recession, and on the company’s significant losses and writedowns. To which Mr Prendergast said; “We hit some road blocks in the US. Fundamentally our strategy is good but our timing was lousy. We went too fast.”
Mr Prendergast said he and the board had learnt many lessons they would carry forward, and admitted that although the company’s expansion into the US was aggressive, it was done for the company and, more importantly, the shareholders’ best interest.
Mr Muir supported his chief executive by saying no publicly listed New Zealand company had weathered what the recession had dished out better than Pumpkin Patch, that has seen retail market dramatically constrict in New Zealand, Australia, the US and UK over the past 18 months.
The company offered shareholders light relief, claiming the Australian market was starting to pick up again, and with plans for 30 new stores there is fresh hope for the retailer across the ditch.
Mr Muir said the company would focus on the US, where it believes there is a market and a demand for its clothing, but would not give further guidance on the company’s goals as a whole apart for stating it would continue to expand, to pay off debt and to focus on new emerging wholesale markets such as China.
“We will continue to monitor stores on a store by store basis. Foreign exchange [the strength of the New Zealand dollar against the greenback and the GBP] and volatility, unprecedented markets resulted in soft retail returns.
General housekeeping matters included PricewaterhouseCoopers being appointed as auditors of Pumpkin Patch. Shareholders also voted to authorise the directors on the auditors remuneration. David Jackson and Jane Freeman were re-appointed as directors on the company’s board.
Ms Freeman said Pumpkin Patch had turned over every stone they could to deliver money for the shareholders and had an unrelentingly appetite to succeed.
Shareholders also voted in the Pumpkin Patch Long Term Incentive Share Scheme, which means around 60 long-term employees – including Mr Prendergast and executive director Chrissy Conyngham – can buy further shares in the company.
Pumpkin Patch is based in Auckland and retails in around 22 countries.