Since my last Share Price Alert on Pumpkin Patch Ltd [PPL.NZX] back in March at $1.31, PPL shares have sunk another another 16c or 15% to close at a 52 week low of $1.15 yesterday.
The principle reason for this is negativity over the whole retail sector that comes off the back of a poor profit result out in March 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 .
PPL shares have lost approx 46c this year so far and since an April 2010 high of $2.30 they have shed more than 55% 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.
Again, be patient and look for further weakness to buy.
Disc I own PPL shares in the Share Investor Portfolio
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ReplyDeletePPL heading below $1. Trading update came out today. All US stores are closing, increasing costs of materials and all sorts of other bad news.
Buying opportunity?
Any thoughts Darren?
Cheers.
Yeah, well, i knew insiders were selling because of something they knew that I didn't but it isn't alot different news that we have gotten over the last 2-3 years.
ReplyDeleteI don't have a whole lot of faith left with management over this one. they should have seen the writing on the wall 2 years ago:
http://shareinvestornz.blogspot.com/2009/06/pumpkin-patchs-north-american.html
and got out completely. You would have to question the UK unit and managements ability to run the company well in line of a series of poor decision making.
I am not going near it and would like to depart when the market and the company's fortunes improve.
Its a good brand but has been managed very badly.
Ill write in more detail latter.