Why did you buy that Stock? [Pumpkin Patch]

Pumpkin Patch Ltd [PPL.NZ] was one of my long term growth investments because I saw its potential for future growth to be exceptional but still some time off.

Pumpkin Patch and sell trendy kids clothing in 4 different markets and currently have over 200 stores.


Why did you buy that stock?

Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]


The brand recognition is very strong and customers are very loyal to that brand. This is one of the main reasons why I purchased shares in the company. That is, while many retailers of children's clothing sell nice clothes at reasonable prices Pumpkin Patch clothing sells at a premium because of its branding.

Pumpkin Patch designers have also enabled the brand to continually be reinforced by constantly releasing new clothing designs and therefore keeping that competitive edge in the markets they enter.

I wanted to purchase shares in the IPO a few years back but waited to see a few years of results before jumping in. Of course profit has slowed over the last 12 months or so, most retailers have suffered from a global slowdown but growth for the company over the last 4 years has been good and entry has been made into Britain and America since their listing.

The expansion management impressed me and those that run the company have been doing a fine job taking the company to the world. America has been a tough nut to crack so far but it seems the slow roll out of stores in Texas and California has been managed well if store level results are any indication.

So good management, as it should be always, is another overriding factor in my purchase decision. They do the selling of kids clothing better than any other retailer in the world that I have seen and this is where I see the growth.

One thing I haven't covered in much detail in any of this series before, with the exception of Mainfreight Ltd[MFT.NZ] I think, is company culture.

Like Mainfreight, company culture at Pumpkin Patch is brilliant, you can see it in the way you are treated when you walk into a store and that culture is bred from management down. If a business has a great company culture its employees are happier, and that leads to better sales and an increased bottom line-you cant go past that when looking at a reason to buy a company's shares.

Another small reason to purchase, my wife loves the clothing and we are trying for a baby and she can shop for Africa!

Now I have held Pumpkin for about 2 years and at an average purchase price of about NZ$3.70, so at a current market price of less than half that, it hasn't been good in the short term but I am a long term man so wouldn't be adverse to buying more should my dividend account have some money in it.

Disclosure I own PPL shares in the Share Investor Portfolio.


Pumpkin Patch @ Share Investor

Pumpkin Patch Ltd move downmarket
Long Term View: Pumpkin Patch Ltd
Pumpkin Patch's North American Downsizing a Prudent move
Digging at Pumpkin's Profit
Long vs Short: Pumpkin Patch Ltd
Pumpkin Patch Buyback shows Confidence in the Future
Pumpkin Patch takes a hit
Pumpkin Patch ripe for the picking
What is Jan Cameron up to?
I'm buying
Why did you buy that Stock? [Pumpkin Patch]
Rod Duke's Pumpkin Patch gets bigger
Buyer of large piece of Pumpkin Patch a mystery
Pumpkin Patch a screaming buy
Broker downgrades of PPL lack long term vision
Pumpkin's expansion comes at a cost
Pumpkin Patch vs Burger Fuel
Pumpkin Patch profits flatten
New Zealand Retailers ring up costs not tills

Discuss PPL @ Share Investor Forum

Download PPL Company Reports

Buy Pumpkin Patch Clothing

From Fishpond.co.nz



Buy Bird on a Wire: The Inside Story from a Straight Talking CEO & more @ Fishpond.co.nz




c Share Investor 2008