Website woes add to retailer Pumpkin Patch's problems

UPDATED: Pumpkin Patch: Death by a thousand cuts

Problems with Pumpkin Patch's [NZX: PPL] website have added to the company's list of woes as new management tries to turn the baby and childrenswear retailer around.

In an update to the NZX this afternoon, Pumpkin Patch said sales in the six months to Jan. 31 fell 16 percent to $102.8 million from the same period a year earlier. Online sales fell by 13 percent, a move the company said was "non expected " and caused by a significant shortfall of inventory available, as well as the transition to a new ecommerce platform. It says the issues have now been resolved.

Investors were warned earlier this month that adverse currency movements and problems in its wholesale business meant earnings before interest, tax, depreciation and amortisation would be around a fifth of what was achieved a year earlier. Today's figures show ebitda of $1.8 million, down from $9.2 million. Wholesale sales fell by 73 percent.

The cost of reorganising the business and money set aside against loss-making stores and underperforming assets was $3.4 million. Pumpkin Patch reported a net loss of $6.8 million compared to a profit of $700,000. Net debt is down to $39.6 million from $52.7 million.

Sales in Australia offered a ray of light however, with same store sales up 1.5 percent. Sales in New Zealand were down 4.5 percent, a performance blamed on the long-term underinvestment in its stores here. Management said that problem will require time and investment to resolve with their ability to change the stores at the desired speed, limited by available funds.

Looking ahead, managing director Luke Bunt and chief financial officer Dave Foster said normalised ebitda for the year to the end of July 2016 is expected to be between $2.8 million and $3.4 million. They said over the next six months they'll consider if more money needs to be set aside to cover further asset risk.

Pumpkin Patch reported normalised ebitda of $11.7 million in the 2015 financial year and $17 million in 2014.

Shares of Pumpkin Patch rose 7.3 percent to 8.8 cents but have fallen 32 percent since the start of the year.

(BusinessDesk)