Pumpkin Patch Shares Drop by Record as Profit Plunges, CEO Quits
Shares in Pumpkin Patch Ltd. headed for a record drop after the New Zealand-based children’s clothing retailer said full-year profit plunged 51 percent and Chief Executive Officer Maurice Prendergast resigned.
The stock fell 11 percent to 79 New Zealand cents, as of 12:33 p.m. in Wellington, set for the biggest drop since it started trading in June 2004. Underlying profit fell to NZ$12.6 million ($10 million) in the year ended July 31, from NZ$25.5 million a year earlier, the Auckland-based company said in a statement.
Pumpkin Patch’s shares have slumped 53 percent this year, the second-worst performer on the benchmark NZX 50 index, as weak consumer spending, rising garment costs and a strong local currency curbed earnings. The company in June said underlying profit would be between NZ$12 million and NZ$14 million.
The company is “taking a hard look at all aspects of the business,” Prendergast said. “If the results from a store are not acceptable and we cannot find a suitable solution the store will be closed.”
The company’s board appointed Neil Cowie, currently the retailer’s chief operating officer, to replace Prendergast as CEO when he leaves at the end of the year, according to a separate statement from Pumpkin Patch.
The new financial year has started with a better inventory position and trading results are ahead of the year-earlier period, Prendergast said. Still, 2012 is likely to be “another challenging year” with soft trading conditions and a high exchange rate that reduces profits from overseas divisions when they are translated back to New Zealand dollars, he said.
The net loss for the year was NZ$1.9 million after including NZ$14.5 million of items such as U.S. store closures and a review of its U.K. operations, the company said
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