Wellington, Nov 18 NZPA - Children's clothing company Pumpkin Patch said the global financial crisis meant 2008 was a difficult year for retailers and 2009 promised to be just as tough. Chief executive Maurice Prendergast told the company's annual meeting today that 2008 was a challenging year and 2009 "looks every bit as challenging".

He said the retailer had strong sales and profit performance in Australia and the New Zealand operation continued to grow.

The difficult retail environment had particularly affected its United States operation.

Mr Prendergast said the financial crisis would impact retail companies during 2009 and Pumpkin Patch "won't be immune".

"We have taken a number of steps over the last six months to deal with the challenges and are now starting to see some positive responses from our customers."

Staff cuts were made at head office and stores and a head count freeze was implemented, costs are being reduced and promotions will be aimed at enticing customers into the stores.

The company also increased advertising spending, reduced inventory holdings, reduced capital expenditure and realigned its foreign exchange portfolio to prepare for the difficult times ahead.

While Mr Prendergast predicted a profit reduction on Australia and New Zealand next year he said the company was "well-placed with a strong brand".

In the United Kingdom, the company planned to focus on getting better supply to its stores.

The Untied States will "understandably be our most difficult market".

The company will stop expansion until the market improves.

Pumpkin Patch announced an operating revenue of $410.4m, up 12.3 percent, in September.

The company's earnings before interest and tax (ebit) in New Zealand was up 0.1 percent to $12.6m in the 12 months to July 2008.

In Australia, ebit was $41m, United Kingdom had a loss of $2.6m, United States had a loss of $9.2m.

Net profit after tax was down 27.2 percent to $20.1m.

Pumpkin Patch shares were trading at a low of 95c by mid afternoon today having traded at around $2.89 in November last year.

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