The statement by chairman Peter Schuyt yesterday on possible covenant breaches follows last month's tagging of Pumpkin Patch's annual accounts, with auditors PricewaterhouseCoopers saying there was ''uncertainty that may cast doubt'' about the company's ability to continue as a going concern.
Mr Schuyt speaking at Pumpkin Patch's annual shareholder meeting, outlined several issues during a ''challenging year'', including a difficult retail environment, negatively affected revenue and profit margins and restructuring.
''Supply chain disruptions also had a negative impact on our ability to meet both customer demand and expectations at key times during the year,'' Mr Schuyt said.
From a high-flying ''marquee float'' in January 2007, its shares hit an all time high of $4.95 post-float.
However, during the past year they had shed more than 65% in value, from 90c, trading down a further 12% yesterday after Mr Schuyt's statement, to 30c.
Craigs Investment Partners broker Peter McIntyre said Pumpkin Patch's issues reflected ''the demise of main street retailers'' facing ''a massive wave of online shopping'' competition.
''They need capital and probably need it quick . . . either fresh capital from a rights issue with shareholders, or renegotiate their banking facilities,'' Mr McIntyre said.
Bank debt at July was up 34%, from $48.3 million to $64.9 million.
Mr Schuyt said the company had the ANZ's support during ''this challenging trading and change period'' and remained in compliance with the covenants.
''The outcome of this [seasonal peak] trading period will materially affect our financial result and the outlook for the remainder of the year.
''Should trading not deliver to expectations over this period, or worsen over the first half of next year, then there is a risk the company may breach banking covenants in the latter part of this financial year.
''Seasonal trading results will become clearer over the next three to four weeks,'' he said.
PwC said last month: ''If the group is unable to continue meeting its obligations under its bank facility agreement, is unable to renegotiate that facility or obtain alternative sources of funding, then this indicates the existence of a material uncertainty that may cast doubt about the company's and group's ability to continue as a going concern.''
