Pumpkin Patch Limited reported its audited results for the 12 months ended 31 July 2012.
Neil Cowie,Chief Executive Officer,said"While the trading result exceeded market expectations it clearly reflects the challenging conditions we have experienced across 2012.Regardless of those challenges I am very pleased with how the team has undertaken the difficult task of reorganizing the business so we can focus on our core strengths and execute long term strategies that will deliver much improved financial results for shareholders."
Cowie added"Despite the challenging environment Australian sales were up 4%and New Zealand sales were up 3%driven by very strong online sales growth and positive sales growth from our retail stores.We encountered increased promotional activity and higher product costs,mostly cotton related,and as a result gross margins were impacted.However later in the year margins improved due to lower product costs and higher import exchange rates.We are expecting these improvements to carry over into the 2013 financial year".
Cowie highlighted the performance of the Online business unit."Global online sales this year exceeded$30m and global online earnings exceeded the EBIT generated by all of our New Zealand retail stores combined.This is a major milestone and a sign of the growth potential and scalability of our online model.Our online sales in Australia are the equivalent of around 11%of our retail sales which is twice that of the average Australian retailer".
Cowie continued"One of our key focus areas is the development of multi-channel strategies.The merging of the traditional retail and online models is only just beginning however we believe we are ahead of the pack and will retain that position as we continue to invest in technology and supply chain capability.The customer reaction to our new'click and collect'(buy online and deliver to store)model has been way above our expectations.We will be rolling out free in-store wi-fi for our customers in 2013 and trialling a number of other multi-channel options so watch this space."
Cowie provided an update on its International business unit."We are expecting increased revenue from most International markets in local currency terms in the coming year but the continued high NZ dollar will negate much of this growth.We are currently looking at a number of new international franchise and online opportunities for both Pumpkin Patch and Charlie&Me brands however any new markets will take time to generate noticeable earnings."
Cowie continued by saying"We are becoming a true multi-channel operator.Having a strong Australasian retail presence,a rapidly growing international online operation,and the opportunities for our international wholesale/franchise business model gives us so much ftexibility when looking at growth options.Couple this with the dual brand Pumpkin Patch/Charlie&Me strategy and you open up a lot more opportunities."
"We have managed inventory a lot better and have been very disciplined with capital expenditure.As a result inventory is considerably lower than last year at$61 m and bank debt is also lower at$55m.With better trading performances in 2013,good control over inventory,costs,and capital expenditure we are forecasting bank debt to further reduce over the coming year".
Cowie concluded by saying"Not withstanding current retail conditions following the reorganization,which is now mostly complete,we are a simpler and more agile business that is much better placed to take advantage of the opportunities that exist across Australasia and our international markets.We can now look towards the future with more confidence".
