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Pumpkin Patch appoints administrators to UK retail operations
[Fri 20/01/2012 03:41:55]
 Pumpkin Patch’s UK subsidiary, which operates 36 stores, has been placed into administration after a review conducted by the company and external advisors.
The decision does not impact the New Zealand parent company or the companies which operate 185 Australasian retail stores, 20 international wholesale markets and the online business, which operates across five international markets.
“The return on investment from the UK retail operation has not been acceptable and the current trading losses being generated only accentuate this,” says Pumpkin Patch CEO Neil Cowie. “The economic environment in the United Kingdom and in wider Europe is extremely difficult and we believe it is going to get worse before it gets better.
“Therefore we expect the UK operation to make losses for some time to come. While the decision is a hard one it is a decision we had to make as it just doesn’t make sense for us or our shareholders to continue to maintain the existing operation up there.
“As part of the administration process we are effectively handing over the day to day control of the UK subsidiary to the administrators. As such we cannot pre-empt what actions the administrators may take in the coming days and weeks. However, we anticipate that if they cannot find any alternative options some or all of the UK stores will be closed.
“We are confident that there is a place in the UK market for our brands. This is supported by our fast growing UK online operation and the fact that 750,000 customers shopped at our UK stores over the last 18 months. In fact, the review highlighted a number of interesting opportunities for Pumpkin Patch and Charlie & Me in the UK and we will be exploring these over the coming months. In the meantime we will be ramping up our existing UK online activities to continue supplying Pumpkin Patch product to our loyal and supportive UK customers.”
The elimination of losses from the United Kingdom retail operation will improve total group earnings and cash flows for the second half of the 2012 financial year and into the future.
Pumpkin Patch has achieved solid Christmas retail sales, up on last year in Australasia, however, margins were affected by the increased promotional activity needed to get consumers shopping. The company has also achieved strong growth across its online platform and says there are signs wholesalers will be increasing their orders in the next financial year.
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