Beleagured children's retailer Pumpkin Patch has rejected plans for any sale or recapitalisation of the ailing company, instead opting to focus on improving its performance.
Confirmation there was no sale or recapitalisation going ahead, released late on Friday, meant Pumpkin Patch's shares yesterday plunged 20% to 20c - just above its all-time low and its market capitalisation fell to $33.8million.
Increasing competition, retailer discounting and supply chain issues have all been cited in the past.
In late November, Pumpkin Patch announced it risked breaching its banking covenants, and in March said it was seeking proposals to either sell or recapitalise.
Its all-time share high was $4.95 in January 2007, and all-time low 19c, in February this year.
Chairman Peter Schuyt said discussions were held with a number of interested parties but there were no proposals which could ''represent satisfactory outcomes for the company''.
Instead, the board would continue to focus on performance improvement initiatives, which it believed could deliver greater value to shareholders over the medium term, than any alternative presently available, he said.
''Nonetheless, market conditions are expected to remain challenging and earnings may be volatile,'' he said.
Craigs Investment Partners broker Peter McIntyre said yesterday's 20% share price plunge reflected investor ''disappointment'' with the company's performance.
''There were likely a number of interested parties, but only on their terms. They've decided to go it alone,'' he said.
While Pumpkin Patch had ''impressive'' revenue of more than $100 million and would-be buyers had access to low-interest capital, Pumpkin Patch's actual profit margins were crucial, which might have been a consideration of would-be buyers, Mr McIntyre said.
On a report from The New Zealand Herald which said up to nine underperforming stores faced closure this year, Mr McIntyre said ''downsizing'' was likely, which would be unprofitable outlets.
Mr Schuyt said normalised earnings before interest, tax, depreciation and amortisation for the year to July would be about $14million and debt and inventory cuts were expected.
Mr McIntyre said the company said in April it planned to reduce net debt by $14.8million.
As of January, Pumpkin Patch had total liabilities of $92million, against $47million assets, with banks owed $28million.
For the year to July 2014, Pumpkin Patch posted a $10.2million loss, following a $5.1million profit the previous year.
For its half-year to January, it posted a $749,000 after-tax profit, which a year previously was a $106,000 profit.
The New Zealand Herald reported there were proposals from up to 10 parties, including private equity firms and others in the retailing sector.
Pumpkin Patch's half-year to January reported a 2.2% rise in revenue to $121.9million and after-tax profit up 10.7% to $1.5million, but restructuring costs at the time of $1.1million dragged the profit down to $749,000.
