Wellington, Nov 24 NZPA - Pumpkin Patch shares rose 11 cents to 91c after the children's clothing company announced a plan to buy its own shares back.

The company's shares traded down to 79c on Friday, their lowest price since being issued at $1.25 in 2004. The share price peaked at $4.95 in January last year.

"The buyback reflects our belief in the true underlying value of the Pumpkin Patch brand and our confidence in the company's continued financial performance into the future," chief executive Maurice Prendergast said.

Brokers said buyback can be a good idea if a company has nothing better to do with its money and has a strong balance sheet.

This year Vector announced a buyback of 2.5 percent of its shares just three years after it listed and had to get a waiver because so few shares were left trading on the market.

Pumpkin Patch is to buy back up to 8.35 million of its ordinary shares. Stock exchange data showed Pumpkin Patch has 167m shares on issue. Paul Richardson, chief investment officer of BT Funds Management, said it was a question of the best use of capital.

Generally investors preferred companies to invest capital into their own business to generate higher returns but some companies think their shares are so undervalued they can use their money best by buying their shares back.

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