Pumpkin Patch's operating profit slumped 46%, from $40.1 million last year to $21.6 million, while total revenues were down 6.6% to $356.8 million.
Total one-off costs of $15.6 million, including UK store impairments and "onerous" leases, US inventory costs, foreign exchange losses and reorganisation costs resulted in a loss of $1.87 million, compared with last year's after-tax profit of $25.5 million.
Shares in Pumpkin Patch, which have declined in value about 60% during the past year, yesterday traded down more than 10% after the announcement, at 80c, near their low.
Founding director, and now outgoing chief executive, Maurice Prendergast, said the disappointing result reflected a "challenging retail environment", further undermined by increasing cotton costs, foreign exchange losses, natural disasters in Christchurch and Queensland, and Middle Eastern political unrest.
"While we are naturally disappointed with the overall group result you just have to look at the large-scale store closures and restructuring plans announced by a number of the major international and Australasian apparel retailers as an indication of how tough it has been," Mr Prendergast said in a market statement yesterday.
Craigs Investment Partners broker Chris Timms said the "poor" result reflected a balance sheet in "much worse condition" than a year ago, especially with debt increasing from $26 million to $60.9 million.
With 250 stores across the world, consisting of brands Pumpkin Patch, Charlie & Me, Urban Angel and outlets, Pumpkin Patch will close its 20 US stores by January 2012. Four in the UK have already been closed and landlords of 14 more stores must offer acceptable lease renewals, or more stores will be closed.
Mr Prendergast said the general economic environment in Europe and the UK continued to deteriorate, prompting the UK retail operation review, while in the US, sales were up 5%, but foreign exchange rates saw a 4% decline, in New Zealand dollar terms.
As with many other retailers and apparel companies initially suffering from online competition, Pumpkin Patch is now targeting new opportunities from its own online business, which Mr Prendergast said were "significantly up" for the year.
