New Zealand Pumpkin Patch Reviewing US Operations, To Close 20 Stores

Children's clothing retailer Pumpkin Patch Ltd. (PPL.NZ) said Tuesday it will close 20 stores in the United States due to the prolonged financial crisis.

"With the high degree of uncertainty as to how long the current downturn will continue the company has made some difficult decisions and has today outlined a reorganization plan that it has begun implementing in the United States," the company said in a statement.

Pumpkin Patch said it would close approximately 20 of the company's 35 stores over the next two months. The stores to close are generally the more recently opened stores that "have struggled to gain traction in the very difficult retail environment that has prevailed in the market since late 2007," it said.

Assuming no further deterioration in trading levels, the reorganized store network will generate "close to break-even earnings" at a store level, it said.

That, combined with a reduction in U.S. Head Office costs will generate a loss in the 2010 financial year of around NZ$3 million, better than analysts' forecasts of a NZ$13 million loss.

It said full recognition of all reorganization costs will be made in the 2009 financial year. Non-cash costs are expected to be between NZ$30 million and NZ$34 million.

-By Rebecca Howard, Dow Jones Newswires; 64-4-471-5990; [e-mail]