Wellington, Sept 23 NZPA - Pumpkin Patch reported full year net profit, excluding non-recurring items, down 13.9 percent to $14.7 million, as difficult retail conditions continued in its markets.

"Extreme" volatility in the United States continued to materially impact group earnings across 2009, the children's clothing company said today.

A US store reorganisation plan led to impairments and other non-recurring costs of $39.9m being recognised during the year to the end of July.

The bottom line net loss reported by Pumpkin Patch was $26.7m, compared to a profit of $17.1m a year earlier.

Net profit, excluding all US stores and non-recurring items was up 7.8 percent to $25.1m, while net profit excluding the 15 closed US stores and non-recurring items was down 4.2 percent to $18.5m.

A final dividend of 4.5c per share is being paid, up from 3.5cps, taking the total dividend for the 2009 year to an unchanged 7.5cps.

Pumpkin Patch chief executive Maurice Prendergast and chairman Greg Muir said trading conditions were expected to remain difficult in the near term.

Despite that uncertainty, the initiatives undertaken in 2009 had positioned the company well to take advantage of improved trading conditions when they eventuated.

The initiatives resulted in a cut in net bank debt by 77 percent to $18.4m, and reduced inventory holdings by 34 percent or $41.6m.

"Total group revenue grew 4.5 percent to $428.6m despite the extremely difficult retail conditions experienced in all the company's global markets," they said.

In the US, the company closed 15 of its 35 stores in response to the difficult economic environment and high levels of uncertainty as to how long those conditions would continue.

Leases on the remaining 20 stores were being renegotiated at levels that better reflected current market conditions.

The US reorganisation plan used legal protections available to US corporate bodies that reorganised their business operations and therefore did not have an impact on the New Zealand parent company, Mr Prendergast and Mr Muir said.

Excluding the non-recurring reorganisation costs, the US retail segment had an operating earnings before interest and tax (ebit) loss of $14.8m for the year.

"Adverse trading conditions and the relatively young age of the majority of the stores made it impossible for stores to make any headway in 2009."

The Australia Retail segment had turnover up 2.5 percent on 2008, with ebit down to $38.5m from $41m a year earlier. Five new Australian stores opened during the year taking the total to 111.

New Zealand Retail reported a 1.9 percent fall in sales .

A change in sales mix resulting from the opening of four Outlet stores since the beginning of 2008 and increased promotional activity during 2009 had an impact on segment margins. As a result ebit for the year was down to $11.1m from $12.6m.

With two new stores opening during the year, the total number in this country rose to 51.

The Wholesale and Direct segment had turnover up 5.3 percent to $62.5m. Ebit was up 6.7 percent to $16.6m.

Softer conditions faced by wholesale partners in their home markets led to lower wholesale orders, specially in the latter part of the year, Mr Prendergast and Mr Muir said.

But that was offset by lower average export exchange rates and a strong performance from the mail order and internet business. United Kingdom Retail sales were similar to last year but high promotional activity led to a generally lower margin. The ebit loss for the year was $5m before non-recurring impairment charges.

A non-cash impairment charge of $6.4m was made to adjust the carrying value of 10 British stores. During the year one new store was opened in Britain taking the total to 36.

Pumpkin Patch shares were down 2c to $2 around noon, having reached a year high of $2.08 earlier in the day.