Thursday, June 16, 2011

Share Price Alert: Pumpkin Patch Ltd 4

Since my last Share Price Alert on Pumpkin Patch Ltd [PPL.NZX] just a week ago at $1.15, PPL shares have sunk another another 13c or 15% to a current intra-day price of $1.03. shares are off a 52 week low of 98c yesterday after a company restructure and profit downgrade announced Wednesday.

PPL shares have lost approx 59c this year so far and since an April 2010 high of $2.30 they have shed more than 70% of their value.

This might present an opportunity to buy PPL on the cheapish side.

I would be patient though, because management don't seem very clear about the future of the company and its trading proposition over the calendar year and further pressure is likely to come over the rest of 2011-2012 as people close their wallets, head for cheaper less brand oriented fare and the company realises losses from the US store closures and a poor start to "winter" trading - a winter that hasn't arrived yet and will be severely impacting on margins.

This will not last however, PPL is a good brand and once the economy gets going again - whenever that is - we will see this company doing better as mums start to look for brands again.

A rider to this is the poor management of the company. It needs to be changed because of the poor performance of the company and bad decisions made over the last 5 years and if it does the company will clearly be better off without the weight.

Again, be very patient and look for further weakness to buy. This share has more downside to come.

Disc I own PPL shares in the Share Investor Portfolio

Share Price Alert Series

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Discuss PPL @ Share Investor Forum
Download PPL Company Reports

Buy Pumpkin Patch Clothing

Buy What Was I Thinking: A Memoir @

What Was I Thinking: A Memoir, by Paul Henry

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