photograph by Stephen langdon
Pumpkin Patch is a rarity—a design-led, publicly listed export success story. Despite taking a hit during the recession, the 20-yearold company now has 230 outlets, $382 million in sales and exports to 21 countries. For that reason it’s the supreme winner of this year’s NZTE International Business Awards.caught up with chief executive Maurice Prendergast on the eve of a turnaround profit announcement
The story of Pumpkin Patch is spectacular, including an impressive turnaround in your profits from last year. Did you plan on being this big? And was exporting always on the agenda?
I wasn’t at Pumpkin Patch for the first couple of years but it’s fair to say that I don’t think global expansion was really the original idea. [Founder Sally Synott and friends] were going to start a New Zealand brand catering to New Zealand market. But it was quickly apparent, especially as [design director Christy Conyngham] became involved, the designs did have international appeal.
We developed in stages, and as you conquer one stage you grow your expectations for the next. We were a New Zealand mail order company to start with, and then we progressed into a New Zealand store. We had a mail order business in Australia of about 50 million dollars worth of turnover before we even opened our first Australian store. So it’s been a staged growth.
Lots of Kiwi companies are happy to become suppliers to other brands, but you’ve been relentless in growing the Pumpkin Patch brand with your own IP, designs and stores. That sounds hard! Why do it?
We’ve always said we’re a designer company and I guess in fashion that’s what you have to be. So we have controlled the process to make us unique and that means, you know, maybe buying artwork or having our inhouse artist develop artwork. It means making sure fabrics are unique to us, making sure the product’s totally unique to us and a brand that’s unique to us. I think that’s what’s given us an edge and given us such a distinct look.
And would you do that again?
It’s hard, you know, there’s no doubt, but if it was easy everyone would do it! The early years are about hard work and little reward. And you need to continually invest in your business. We’ve invested in two things: our design team and in IT.
We’ve developed systems for warehousing and logistics and management processes from a very early age. I think that’s given us sustainability as a business to weather all the storms and also to punch above our weight.
‘Brand New Zealand’ helps some exporters but for others it’s less relevant. Does it matter to you or your customers?
No, it’s not something we need. The whole concept behind international fashion brands is that they are international, so it was never really one of our core strengths to leverage New Zealand. Most people don’t know Esprit comes from Hong Kong or that Zara comes from Spain. Where it does matter is in our interpretation of fashion; it’s slightly different to, say, a European fashion business. Our location in the world gives us a very different look that reflects in the casualness of some of our clothes. So while it’s not brand New Zealand so much, what is appealing to our customer is the look that we get.
Does your localness help Aussie sales?
No, like all good Kiwi brands, Australia claims Pumpkin Patch as their own!
The company has closed 16 out of 36 stores in the US in the past two years. Was your expansion into the US a mistake?
It was not a mistake to go to the US, but I think the mistake was in the scale of expansion. If we had our chance again we might have been more conservative, but like most people we didn’t see a recession coming. In fact, it came to the US long before everywhere else, and it looks like it’s going to leave after everywhere else! So, look, there’s no doubt it’s been difficult, we’ve made some hard decisions, substantially reducing our exposure to the US. But then that’s reflected in our positive result.
What matters more: ‘made in New Zealand’ or ‘designed by New Zealand’?
Our customers quite clearly have told us that they love our designs but they equally love our prices. So it becomes a simple mathematic equation: we can’t manufacture in New Zealand and get those price points.
It’s worth noting that if Pumpkin Patch was manufactured in New Zealand we’d be a much smaller company and we’d employ a lot fewer New Zealanders. I don’t see manufacturing as the be-all and end-all. Having people sitting behind sewing machines—I’m not sure it’s all that good for our country or our young people. I would rather have them employed designing worldwide clothing ranges and looking at the logistics of a global company and creating the infrastructure that goes to support this kind of complicated business. The business of creating a global brand is much more complicated that just the manufacturing.
China still scares people— especially around quality. Is that fear justified?
We were one of the first Kiwi companies to outsource our manufacturing to China. We have 200-odd factories that make our garments, so we’re not a small player, and we’re manufacturing about 23 million garments a year. For us it’s been part of our model all the way along. I’ve long advocated that New Zealand businesses can manufacture elsewhere but design from New Zealand. It’s a great model to run an international business.
And we get very good quality out of China. Obviously you get what you pay for in China and we have stringent processes to make sure that our quality aspirations have been kept. But we have a long-term relationship with many, many suppliers.
You are a design-led, growth company, that’s publicly listed. Do you ever feel lonely occupying that space? And how do we get more companies like yours?
Do we feel lonely? Yes, many times, I can tell you! Public companies have their challenges and, you know, you learn to harden up being publicly listed. Everyone can do the job better than you can, it seems. Listing was a way for some of the investment partners to still be involved in the business but getting sufficient out. We did that about seven years ago.
I think we were making maybe half or maybe less than a half of what we currently do and, you know, we’ve watched our share price go up and come down, which can be good and bad!
Would you list again?
It depends where your business is at but I’d personally do it again. I would like to see more New Zealand companies follow the lead and do what Pumpkin Patch, Kathmandu and Michael Hill have done. And not just retail companies, I think there are other very good private companies that tend to stop short of listing because they simply want to remain private companies. And that’s kind of disappointing; they could be so much bigger and stronger through the right structures.
So you want to see more like 42 Below’s Geoff Ross, who really is putting himself out there with his high-growth and high-risk companies?
Look, I don’t really comment on individuals! But entrepreneurs are a rare breed and there are various flavours of them. So, there’s room for everyone on the stage I think.
You can find the other winners here.
In brief: PUMPKIN PATCH
Pumpkin Patch is a creative economy icon. What’s now a publicly listed company with $382 million in sales started in 1990 as an idea from motivated mum Sally Synott, who launched her kids clothing shop and a mail order business. Synott hit a sweet spot, because Pumpkin Patch grew, fast, expanding to Australia and by 1996 had a chain of shops on both sides of the Tasman.
By 2000 it raised new capital and expanded its stores to the UK. Soon after it added outlets (not all its own) in the Middle East, South Africa, Asia, the US and Ireland. The growth was so good, that it listed in 2003 with a $120 million float.
It now exports to 21 countries and has 230 of its own stores.
Not many design-led, creative Kiwi firms make it so far, so fast. It’s what Malcolm Gladwell would call an outlier. And a deserved winner of the New Zealand Trade and Enterprise Judges’ Supreme Award For International Business.