Pumpkin Patch Ltd [PPL.NZX] has been out with a profit downgrade this morning and this has seriously affected its share price, it has dropped by more than 9.5% or 15c at time of writing to be trading at $1.42.
There is an overall weakness in retailing stocks at present and just yesterday Hallenstein Glasson Holdings Ltd [HLG.NZX] came out with its own profit downgrade.
The Pumpkins profit levels have been up and down over the last 2-3 years after spending most of its listed life rising and the share price has reflected that.
Most recently it has taken hits from failed expansions into the UK and the USA but now its Australasian units have performed badly for the first time, indicating perhaps something more serious at play.
The company still lacks solid management but they have removed Greg Muir who cost the company millions through their failed expansion outlined above.
The company still has a core of loyal followers and a very strong brand and is well placed to ride out these tough times.
This is a good opportunity to buy on the way down.
I fear though there will be more bad news to come so be patient.
Disclosure: I own PPL shares in the Share Investor Portfolio
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