annual report 2012 - Pumpkin Patch investor relations

chairperson’s letterDear ShareholdersWhile 2012 was another very challenging year for us as we continued to face volatile retailconditions across all of our markets, I look back on the year with a great deal of satisfactionwith the changes we have been implementing, the strategic initiatives we have introduced,and with the focus moving back to our core strengths.During the year we embarked on a major change process aimed at better preparing thebusiness for the future, simplifying our overseas operations, and refocusing on our core businessunits. Of course the most noticeable changes were the closures of the underperforming UnitedKingdom and United States retail stores in January.There were also a number of changes to management structures and Head Office functions.Our long serving Chief Executive Officer Maurice Prendergast stood down to become anon-executive director and handed over the reins to Neil Cowie. Since Neil became CEO hehas implemented a series of initiatives to build on the immense capability that exists within theCompany and drive improved financial results into the future. The team that Neil leads is asmotivated as ever and is determined to make Pumpkin Patch the company they all knowit can be.We also welcomed Rod Duke and Peter Schuyt as directors. Between the two of them they havea wide range of experience that will assist us deal with the current challenging retail environmentand execute a series of growth strategies across our local and international markets. At theupcoming annual shareholders meeting we will be saying goodbye to David Jackson who hasbeen a director since we listed on the stock exchange back in 2004. I would like to thankDavid for his dedication and service to the Company over the last 8 years and wish him wellfor the future.A major highlight for me in 2012 was the growth in our online sales and earnings. Over thelast financial year our online operation generated higher earnings than all of our New Zealandretail stores combined. This is an amazing achievement; a sign of the online capability we haveand the potential that exists for us online not only in our ‘home markets’ of Australia and NewZealand but also in our newer international online markets. We now sell Pumpkin Patch productonline in 8 markets around the world and during the year launched dedicated Charlie & Mewebsites in Australia and New Zealand.Earlier in the year we launched the Patch General Store, an extension of our existing websitesthrough which our customers can access a huge range of the everyday items parents needfor their children, from nappies through to bed linen. While many of the brands sold throughPatch General Store are well known international brands we are excited about giving a numberof lesser known yet very exciting New Zealand brands exposure to our very large customerdatabase. Patch General Store is yet another example of us using our existing online andsupply chain capabilities to develop new business opportunities.If you haven’t already been on our websites I encourage you to take a look; we think we areahead of the pack in the online space and are proud of what we are doing. Most retailers arestruggling with setting up online operations and trying to come to terms with just how the onlinefuture will impact their traditional retail models. Instead we have proactively moved forward,embraced it, and started to leverage our well developed online and supply chain capabilitiesto drive significant increases in sales and earnings.It has also been exciting to see how we have increased the use of technology both online andat store level to come up with innovative new ways for our customers to shop with us. One of thelatest initiatives is called ‘click and collect’ which allows customers to buy online and arrange forpick up to be made via one of our stores. The customer reaction to ‘click and collect’ has welland truly exceeded our expectations which reinforces the need to constantly evolve the customershopping experience whether it be in store or online. We are working on a number of otherexciting things in the multi-channel area which we hope to roll out across 2013.Despite the currently challenging retail environment Neil and the team are looking to the futureand implementing strategies that the Board are confident will deliver our shareholders improvedreturns in the years to come. As Chairperson I look to the future with increasing confidence inthe direction the business is heading.The Annual Shareholders Meeting is being held in Auckland on Tuesday 20 November 2012.I would like to personally invite you to attend the meeting to hear about the changes that haveoccurred over the last year but more importantly hear about the some of the initiatives we areputting in place.On behalf of the shareholders and the Board of Directors I would like to thank Neil and histeam for their hard work and the dedication they have shown during what has been a verytough year and for the effort I know they are currently putting in to developing strategiesfor the future.JANE FREEMANChairpersonJane Freeman09