Thursday, January 27, 2011

Share Price Alert: Pumpkin Patch Ltd

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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  1. Heya Darren,
    I bought a bunch of PPL at 1.70 in November... oh dear oh dear, been a bit of a rotten pumpkin since then.
    I've been thinking about buying some more PPL at these price levels in the 1.40s.
    When you say you fear there is more bad news to come, are you referring to retail in general? Or the upcoming PPL first half results on March 1st?
    Exiting times ahead for the old Pumpkin Patches... good or bad.


  2. Hi Rafa, hey I bought some at $4.25 a few years back and some more at $1.50 more recently.

    Retail in general is bad and isn't going to get better any time soon and I PPL are now struggling in this part of the world.

    I think if you want to buy more for the long term there will be opportunities to buy as the bad news rolls out.

    Be patient.

  3. Thanks for the tip Darren. I will trust your wisdom and be patient.

    I was just walking down Ponsonby Road today and to my surprise, they are building a new Pumpkin Patch store, a little down the road from KFC.
    I found this location to be pretty unusual, as there isn't exactly alot of foot traffic in that part of Ponsonby and I find it hard to see the store being that busy when it opens. But who knows, guess we'll wait and see.

  4. I agree with you re store placement. People in that area tend to buy stuff more upmarket than PPL. From specialist stores with exclusive product.

    Seems wrongfooted to me.

  5. I personally buy quite a few clothes from the new ponsonby store - i find it a great location and there are many new mums walking with strollers along the length of ponsonby rd.


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