annual report 2012 - Pumpkin Patch investor relations

Australia2012 2011Turnover NZ $’000 207,630 198,786 4.4%EBIT NZ $’000 34,953 34,874 0.2%16.8% 17.5%StoresPumpkin Patch 105 107Outlet 15 17Charlie & me 9 8129 132Online trading websitesPumpkin Patch ✔ ✔Charlie & me✔Wholesale ‘doors’ 30 33Although trading conditions in Australia were challenging total sales were up 4.4%to $207.6m, driven by strong growth in online sales and higher retail sales.The market continued to be characterised by higher than normal levels of promotionalactivity which impacted gross margins. When coupled with higher product costs,especially in 1H12, overall segment margins fell below FY11 levels. However ourmargins did improve in 2H12 with lower products costs and an improving averageimport exchange rate.Despite the lower margins and the challenging trading conditions segment EBITincreased 0.2% to $35.0m.At year end we had 129 Company operated stores in Australia with our productsold through another 30 wholesale partner ‘doors’. During the year we launched adedicated Charlie & Me website adding to the online presence we have with thePumpkin Patch website. The response to Charlie & Me online has been very strong.We have had considerable success at reducing rent costs by taking a very disciplinedapproach to negotiating more appropriate lease terms during lease renewal periods.Should we be unable to negotiate suitable lease terms that better reflect current marketconditions we will close stores.Although we are expecting trading conditions in Australia to remain challenging across2013 our brand strength remains very strong and we are well positioned for whenthe market begins to recover. We continue to see long term online and retail growthopportunities in the market for both Pumpkin Patch and Charlie & Me brands. The multichannelinitiatives that are in development will bring an exciting new dimension to ouronline and retail models which we believe our customers will embrace.New Zealand2012 2011Turnover NZ $’000 59,246 57,529 3.0%EBIT NZ $’000 9,566 10,705 (10.6%)16.1% 18.6%StoresPumpkin Patch 35 37Outlet 12 14Charlie & me 4 351 54Online trading websitesPumpkin Patch ✔ ✔Charlie & me✔While trading conditions across the year remained soft total New Zealand salesincreased 3.0% to $59.2m. This was mostly driven by higher online sales with asmaller increase coming from retail stores.As with Australia the market continued to be influenced by higher than normal levelsof promotional activity. This combined with higher product costs impacted marginswhich were down on last year. New Zealand also experienced improved marginsin 2H12 due to lower product costs and better import exchange rates.At year end we had 51 stores open (Pumpkin Patch 47, Charlie & Me 4) anddedicated Pumpkin Patch and Charlie & Me websites operating.We are also expecting New Zealand trading conditions to remain challenging in thenear term. However like Australia we see retail and online growth opportunities forboth Pumpkin Patch and Charlie & Me in New Zealand including a number of multichannelinitiatives in development.15