Pumpkin Patch Ltd [PPL.NZX] shares really got another good arse caning yesterday when its share price dropped another 6c to close at a 52 week low of $1.31.
The principle reason for this was a net profit result out yesterday that was down 44% on last years result.
Of course the market knew of this back in January when a profit downgrade was announced to the market so the result seemed to be a surprise to some.
PPL shares have lost approx 30c this year so far and since and since an April 2010 high of $2.30 they have shed more than 40% of their value.
This presents 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 (commentary in the profit release was confusing to me) and its trading proposition over the calendar year and further pressure is likely to come over the rest of 2011 as people close their wallets and head for cheaper less brand oriented fare.
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.
Be patient and look for further weakness to buy.
Disc I own PPL shares in the Share Investor Portfolio
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well, I can tell you. The only time I ever spent any money at that shop was when I was given free gift vouchers, or in the sales when the items were at least 50% or more off.
ReplyDeleteOverpriced and only rarely can you find nice clothes there, so it is not surprising to me that profits are down. Definitely not a stock I would be wanting to own, especially with cotton going through the roof and Chinese inflation looking out of control. The margins will continue to get squeezed. This not a buying opportunity, it is a slap in the face wake up call to those who still own it.
Have you not seen the real Chinese inflation and cotton prices lately ?
http://finviz.com/futures_charts.ashx?t=CT&p=w1
SB, all temporary things to a long-term investor.
ReplyDeleteThis is a good brand with a good long term future given better management.
I reckon you could be right Darren. However, it will take a change in management to get things going again. It amazes me they collect your sales data everytime you go into their shop but do absolutely nothing in terms of offers to repeat customers!! And the new chain they have launched is just a bloody joke - get your existing concept right first (their product mix is all wrong).
ReplyDelete