Pumpkin Patch's first-half earnings have plunged 98 per cent as competition in Australia and New Zealand forces the children's clothing retailer to discount prices to stem a fall in sales.
The company also had to contend with supply chain disruptions and a high kiwi dollar.
Net profit was $NZ106,000 ($A101,125) for the six months ended January 31, sliding from $NZ4.7 million in the same period a year earlier, the Auckland-based company said in a statement on Wednesday.
Overall revenue tumbled 17 per cent to $NZ128m, driven by a 19 per cent decline in Australian sales, its largest market, and the impact of the high New Zealand dollar against its Australian counterpart.
Chief executive Di Humphries was downbeat about the immediate outlook, saying trading would "remain challenging" as it spent more on promotions and contended with a strong currency.
The company expected there to be a more "downside risk than upside potential for earnings" for the remainder of the year, she said, without being specific.
The shares dropped 13 per cent to 59 NZ cents, near the lowest in more than two years, and have fallen 51 per cent over the past 12 months.
New Zealand sales fell 14 per cent and international sales declined four per cent, which the company said reflected soft conditions in Ireland.
Sales through its international websites rose 34 per cent, but online sales in Australasia were affected by the supply chain disruptions.
"While heavy discounting continues in the Australian and New Zealand markets, Pumpkin Patch is seen as premium brand internationally," Ms Humphries said.
"Given some of the international relationships we are developing and the opportunities that are out there for us, I expect to see some decent earnings growth from our international business unit over the next few years."
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