Pumpkin's expansion comes at a cost

The mood at today's Pumpkin Patch Ltd [PPL.NZX] AGM seemed a little dire.

Talk of extra expenses due to expansion seemed the main theme of the day and a weaker US dollar and stronger Kiwi having a big impact on profit repatriated back to New Zealand.

The "Patch" is expecting earnings growth to come from local markets, increased interest charges, store opening costs and market development costs in the USA and UK continue to have an impact the on the company's results short to medium term.

Like Burger Fuel Worldwide Ltd [BFW.NZX] the initial costs of establishing a sustainable global brand are a necessary evil and in my opinion will increase before they start to decline. If you are invested in Pumpkin Patch to make a buck short term unfortunately the big bucks for this investment are more likely to be realised long term.


A 3,200 ft² shop at 77 Clarence Street, Kingston, UK
leased to Pumpkin Patch Ltd on a new 10 year lease
at a headline rental of £333,330 p.a.x.


If you unhappy with that as an investor then clearly you should have your money elsewhere.

Quite often, when establishing a brand such as this, companies make losses, so it is to the credit of the management of Pumpkin Patch that as yet this hasn't been the case.

Carefully building up a profitable Australasian business before moving to new overseas markets has put the company in a great position to use cash flow to allow them to borrow to grow their new business.

Michael Hill International Ltd [MHI.NZX] has used the same strategy in building their brand in Canada and like PPL they are still running at a loss there.

Store numbers are now at 200 and management look to add around 20 new stores this financial year, down from last years 35 stores, so associated costs should be ameliorated.

The only real threat seems to be from the currency swap from the strong Kiwi dollar if it continues long term but it is something management will have to deal with if it stays strong, perhaps make it a side issue and not give it the significance they seem to every reporting season, simply because there is nothing they can do about it.

Short to medium term though shareholders like me could be in for a bumpy ride.

The market punished the gloomy outlook by cutting the share price by 16c to NZ$2.72 on good volume.


Disc I own PPL shares in the Share Investor Portfolio




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Discuss PPL @ Share Investor Forum




c Share Investor 2007

Wellington March Against Electoral Finance Bill(UPDATED DETAILS)

The protest at Auckland, Sat November 17, 2007


There is a march against the Electoral Finance Bill on Wednesday 21 November 2007.
Assemble at Civic Square from 12 noon...March at 12.30PM. to Parliament.

C Political Animal : Words and Images 2007

Winston Peters Big Baubles

Winston Peters was dressed immaculately as usual, at the Electoral Finance Bill protest, Queen St Auckland New Zealand November 17, 2007.

Winston was heard to say that he is only voting for the bill because his baubles of office told him to.

When asked by a TV3 Journo what his baubles had to do with anything Peters replied, "I didn't get where I am today without large baubles".

Peters got up and addressed the crowd but finished quickly when he soon realized that there were no TV cameras trained on him and everyone was under 40 anyway, so there were no votes to be had.

When asked about the fact that the bill, if passed, would stop free speech in an Election year Peters first blamed the journalist for asking such a profound question, then said the question of free speech for the general public wasn't a problem because he spoke for all New Zealanders and knew what they wanted anyway. He added, "what was really important was that he had free speech in an election year and what is more important than that?"

Going back to the bauble question, Winston was asked where he put them for this momentous occasion because they were not at first obvious to the casual glance.

Oh, Winston curtly replied, like the mongrel of old, "Helen has them in a vice back in Parliament".

With that, his tail between his bauble less legs Winston slinked off more like a lap dog than the mongrel of yesteryear.

C Political Animal 2007

Day of Protest: Auckland NZ, Nov 17 2007

Well, my first political or any protest for that matter went off without a hitch today. No violence, no spitting, no guns, no hakas but plenty of well placed anger, at Helen Clark and the Sisterhood who want to pass the anti democratic Electoral Finance Bill, that will allow unrestrained spending of taxpayer dollars by Labour Pollies in Election year but the ability for private citizens to do likewise will be limited, otherwise the slammer for you buddy.

About 5000 protested the bill as they marched down Auckland's Queen St, not the 2000 reported in the NZ Herald. "1,2,3,4 we don't want your fascist law" rang out as the crowd centered down at Britomart after the half mile trek from the Town Hall.

Old people and young people alike got together on a sunny hot Saturday to protest what could be illegal next year.

I was expecting around 2000 but the crowd was at least double that.

There were banners that read "fascist" anti Clarke banners,a stuffed Winston Peters(how appropriate) New Zealand flags and individuals who symbolically had their mouths taped.



Speeches at Britomart included the organiser John Boscowen who mentioned a letter to the editor from Peter Davies, Helen Clark's Husband, who refuted that the bill was an anti democratic piece of filth and noted he was from the sociology department of Auckland University but had neglected to mention his relationship to the big cheese. My man Leighton Smith from Newstalk ZB was there, his first political protest too, he added that he didn't usually like to get involved in such things but felt so strongly about the cause that he just had to.

Touchingly there was also an 80 plus year old veteran from WW2 and Boscowen reminded the crowd what it was he had fought for and of course it was the same reason we were all there today.

Freedom and democracy.

C Darren Rickard: Images & Content