Pumpkin Patch

[TheBossMan]

NZXR
26/04/2004
GENERAL

REL: 1658 HRS New Zealand Exchange Limited

GENERAL: NZXR: Pumpkin Patch Ltd Proceeding with IPO & Listing Application

Pumpkin Patch Limited today announced that it is proceeding with an initial
public offering (IPO) of shares and with an application to list its shares on
the New Zealand Exchange.

Pumpkin Patch is a leading Australasian children's wear design, marketing and
retailing company.

The offer is expected to open on Monday 17 May 2004 and close on Friday 4
June 2004.

Shares are expected to trade on a delayed delivery basis from Wednesday 9
June 2004.

The IPO will involve the offering of approximately $120 million worth of
shares.

Shares in the IPO will be offered through Goldman Sachs JBWere (NZ) Limited
(Lead Manager) and other selected New Zealand Exchange Firms.

Shares will be allocated to New Zealand retail investors and New Zealand and
Australian institutional and professional investors. There will be no public
pool.

The offer price will be determined by way of an institutional bookbuild.
End CA:00099466 For:NZXR Type:GENERAL Time:2004-04-26:16:58:31

[Burgerbun]

Should have backdoored the childcare outfit here:D

.........?????kiddycorp?

you know, the one with kids running it.


anyway, whats a fair PE for this market?

13-15?

[marinesalvor]

certainly marinesalvoress will want me to be in on this one

[TheBossMan]

quote:Originally posted by cloudnine

Should have backdoored the childcare outfit here:D

.........?????kiddycorp?

you know, the one with kids running it.


anyway, whats a fair PE for this market?

13-15?

you're right - around 15 is the norm for clothing retail.

[willy_wonker]

Will Pumpkin Patch be another bad float like Pacific Brands (PBG)? Maybe better to buy on listing day where the staggers bail out.

[MeNoBatty]

Who are the sellers?

[clearasmud]

quote:Originally posted by TheBoss


quote:Originally posted by cloudnine

Should have backdoored the childcare outfit here:D

.........?????kiddycorp?

you know, the one with kids running it.


anyway, whats a fair PE for this market?

13-15?

you're right - around 15 is the norm for clothing retail.


how come pe of hlg is 12;ppg is 10.these are both good co's

[nelehdine]

HLG and PPg are basically domestic retailers .. PP is huge in Aussie and have a decent toehold in UK as well ... probably deserve a premium ... 15 seems a bit rich though , would have thought 12.5-13 would be fairer with a divi yield of 3.5-4.0%

Disc: 2 kids ( 3Yr & 10mths )

[Placebo]

Good local success story, a home-grown industry that started small, established its niche and has a strong brand. Now expanding into pre-teen clothes thru the HBK Girl chain off-loaded by Hallensteins.

If you're into buying good stories this would be one to go for. Their business model seems to be finding favour in 3 markets at the moment.

Interesting that Greg Muir has popped up as executive chairman -- a good key man to have on board.

I don't intend getting in on the IPO but you could do worse... like buying WHS ;)

Actually I think it's unfair they're going public like this, they should go like AMP and demutualise, giving shares out to everyone whose kids' clothes drawers are stuffed full of PP clothes... [:p] I reckon we've earned it by investing heavily in their early expansion programme over the years...

[nelehdine]

Seem to be plenty of shares up for grabs ... a broker I hardly ever use has guaranteed me $10k worth if I want them after reading the prospectus.

[willy_wonker]

Nelehdine, are you with JB Were? My broker havnt got their firm allocation yet. After the doggie PBG float, there maybe a few shy people out there.

[nelehdine]

I use Winstanley Dickson here in Blenheim ( who have links to ABN Craigs ) to sell my UK shares ( which I have in cert form ). I was in there last week selling some Tesco shares and just casually asked if any PP shares would be available and he asked me how many I would like. I think the company has a good future and at the right price I will probably take up his offer.

[willy_wonker]

I too think PP is a good company with good marketing strategy and good shop design. It captures the emotion of the buyers. But I do thin it is a long term stock with the retail sector on a downturn and their venture into Asia. It all comes down to the price of their shares. If their pricing is right I just might get some.

[Binklebonk]

PP has been a favourite with our household consumer spend for a long time, although my other half and friends suggest caution, as they feel the product designs have lost their way...maybe we aren't in their target market anymore.

[Prophet]

PP is definately of interest and I somehow see it in the MHI mould (not sure if thats a fair comparison without reading the prospectus, rather its a gut reaction). The rag trade worries me a little as its a very competitive sector with low barriers to entry. You also can't ignore the fact that kids clothes are often passed on as hand me downs and that doesn't bode well for sales; but fast growing kids definately does. The franchise is good and the growth opportunites look bountiful.

Per others comments and good practice I'll be looking for a competitive offer price. I'd agree with a PE of around 12 but suspect they might try closer to 15 given the market average.

[MeNoBatty]

Private Equity sellers. Will be watching the price carefully. Hopefully they have learnt from the last few IPOs to hit the market and price closer to PE of 12.

[Nimble]

Thought some comments about the Just Group IPO (Just Jeans, Jay Jays etc) might be relevant. New Issue price suggest PE of 10.1!!!

Just Group shares have been re-priced at $2.10, well below the original indicative range of $2.25 to $2.70 laid out for the institutional investors' book-build process, and well below the maximum $2.60 retail punters paid.

At $2.10, the company was trading on a multiple of 10.1 times prospective earnings and represented a 6.5 per cent fully franked yield. "At $2.10 it seems to represent reasonable value, and the good dividend yield should see some good retail support - whereas, at $2.25, the valuation was looking a little bit stretched."
Other fund managers said they expected the shares to hit the boards at a discount, which was a negative for further retail floats coming to market.

[willy_wonker]

Anyone received research or info on PP? Would like to know the market cap and profit to find out PE. It would be good to work out the PE before a decision to invest.

[Nimble]

On Friday 7/5/04 Just Group listed at A$1.97, 6.2% below issue price of A$2.10. PE now 9.4 and Yield 6.9%. Quite a lot lower than the PE of 12 people are talking about above. This result is likely to put some investors off participating in the PP IPO or atleast tame some of their enthusiasm.

[willy_wonker]

After the disaster listing of Pacific Brands and Just Jeans, Willy thinks you can get the Pumpkins at a lower price on listing.

[willy_wonker]

Pumpkin Patch UK is making lost of $2.5 million a year.

[Footsie]

quite a positive article in the herald today.

Looks like this one could be worth a punt

I'll certainly be getting the prospectus anyway for a closer look

[warthog]

This is ok on the strength of growth figures. Entering any market has a cost attached and in the UK that cost is significant.

But so are the the rewards if they are successful ...

warthog


quote:Originally posted by willy_wonker

Pumpkin Patch UK is making lost of $2.5 million a year.

[Prophet]

Have been running some figures tonight and must say I find the listing 04 PE range of 17 - 20 a bit rich. The company with its good brands might have the growth there to support it(albeit historically a bit patchy - no pun intended) and the company will be conservatively funded after the IPO. But, this is a rag trade stock that we are talking about with its inherent slim margins and low barriers for entry. Its also got the UK bleeding money and you only have to look at WHS, TUA and RBD to see how our market takes that kind of news.

I'm dissappointed as the wife was very keen to take part in this IPO but my verdict is maybe not. Does anyone else have any initial thoughts on this IPO now that the figures are in the public domain?

[willy_wonker]

quote:Originally posted by warthog

This is ok on the strength of growth figures. Entering any market has a cost attached and in the UK that cost is significant.

But so are the the rewards if they are successful ...

warthog


quote:Originally posted by willy_wonker

Pumpkin Patch UK is making lost of $2.5 million a year.



Tell that to WHS and PRG.

[warthog]

Bah! You're picking losers for examples. Michael Hill did very well in Australia (although it is possibly finding Canada a bit of a challenge).

Warthog


quote:Originally posted by willy_wonker


quote:Originally posted by warthog

This is ok on the strength of growth figures. Entering any market has a cost attached and in the UK that cost is significant.

But so are the the rewards if they are successful ...

warthog


quote:Originally posted by willy_wonker

Pumpkin Patch UK is making lost of $2.5 million a year.



Tell that to WHS and PRG.

[MeNoBatty]

First impression is that it is expensive. Need to read the prospectus more carefully. I suspect that it will close at around the $1.20 mark. It really depends on whether you believe the growth story or not. Great brand but tough market. A few suspect IPO's recently will also affect it so some punters will be holding back for an on market purchase. Muir does not have a good track record although you could argue that he was thrown a hospital pass with Warehouse Australia. His departure was never fully explained.

Just B Ware will need to be carefull and i think they will be conservative on their pricing. They have burnt their clients a few times over the last couple of years with TranzRail, Vertex and even Foodlands wasnt that great. The way it is structured gives me the impression that they trying to emulate the BRG float and provide a stag to their clients.

[willy_wonker]

This is a bad time to be listing any retails.

Both JST & PBG had a bad listing. These are international brands with good management and profit.

[MeNoBatty]

From what i can see, Mr Market viewed JST and PBG as low growth stories where PE players had extracted max value on exit therefore leaving new investors with limited upside. Management had been very highly rewarded so there is a risk that they will be more complacent now they have been financially rewarded for restructuring both operations.

Pumkin patch will be viewed by some as having ongoing potential for higher growth with more room to move for off shore expansion. i need to research this area in more more depth, but it appears that this brand is gaining some traction in US & UK and does stand out from the crowd. It is interesting to note that existing players are not exiting their full holdings, so one scenario is that they see further appreciation in these residual holdings (the flip side being they have made their money and anything from here is the icing on the cake).

Does anyone else see this or am i dreaming?

[Bobco]

Have found newspaper reports confusing re PP financials. Without going out and looking for a prospectus, can anyone give me a link to find details of same?
tia
bobco

[MeNoBatty]

www.pumpkinpatch.biz

[Prophet]

On the button there Cantab

[willy_wonker]

After doing some due diligence, Willy got some Pumpkins IPO from his broker. :)

A good long term story, I hope. :)

[Halebop]

Thanks for the link MeNoBatty. I was struggling to find the prospectus. ;)

Pumpkin Patch seems a rare find - a NZ retailer (or any NZ corporate for that matter) doing well in Australia. On the surface it seems there is still plenty of room for growth in Australia - 64 stores versus 37 (soon 39) here in NZ, growing to 71 and 41 in 2005 respectively. Simple demographics would imply room for around 200 Australian units.

Australian retail sales appear to outperform NZ's as well. The OZ Stores contribute $133.9m FY04 and $148.8m FY05 sales ($2.092m & $2.096m each) compared to NZ's $47.4m and $61.3m ($1.215m & $1.495m each). There is not enough data on retail floor space to make further assumptions but I'd guess the Ozzie stores are bigger too? Being childless I'm certainly not equipped to have first hand knowledge!

UK seems a slight problem child (bad pun intended) with little growth forecast and a continued loss forecast on the same store numbers. Perhaps they operate as something of a loss leader to attract wholesale distribution sales? Again, a deficit of data on their purpose and prospects leaves assumption the only arbiter.

Speaking of a lack of data - considering the company is about 13 years old it seems a clearer financial history could have been established.

Excluding implied goodwill (by the indicative offer price range) on the company's balance sheet pre float debt levels are reasonably high compared to shareholders funds. A simple asterisk denotes that interest exense figures for periods prior to 2004 are not relevent to the offer document. I'll take it this means debt levels are radically different now to what they have previously been at. Does this mean substantial private equity has more recently been introduced or does this mean shareholders have previously voted themselves a large capital repayment? Hmmmm.

Given the chances (or at least perception) of a pending retail downturn in OZ and NZ it seems timely to be raising new capital, selling existing capital and forecasting strong sales growth.

Despite this, Return on Assets and Return on Equity looks strong, as does medium+ growth prospects. Buffett style owner earnings calculations are also very positive - with Capex over the 3 disclosed and 2 forecast years slightly lower than depreciation but roughly equal.

At $1.20 the price is probably fair (but not cheap) value given risks and prospects. A $1.40 issue price would mean a somewhat demanding forward PE of 14-15. As this is based on forecast sales growth of 15.5%, compared to just above 10% for '03 and '04 I personally find the price a little rich but I'll certainly put them on my watchlist for any weakness post float. I'd rather pay around $1.00 to $1.10 (or less of course!). But, as Willy Wonker has already suggested, probably a good long term story regardless.

[Capitalist]

I see some sage (Frank Newman?) has opined that Pumpkin Patch is the hottest IPO this year. No doubt attempting, and for a large part succeeding, to tempt the gullible hordes with less critical thinking skills than a pot of Bluff Oysters 4 weeks past their use-by date.

As noted by someone else on this thread, PP's designs have lost their way. "Urban Angel" was a big mistake. And PP are in the unenviable position of being neither fish nor fowl--not el-cheapo, but definitely not the "designer" brand they are touting themselves as. Designer is Polo Baby, OshKosh etc. Living & Giving is the same...as was Levenes...

One should always be very suspicious when this sort of thing lists, just like Pero. Wouldn't touch it with a barge-pole.

[Placebo]

Good piece by Armstrong in the Dom-Post yesterday re IPOs. A good overview I thought. Not dismissing them out of hand, just a `buyer beware' kind of message. That seems more commonsense to me.

[willy_wonker]

quote:Originally posted by Placebo

Good piece by Armstrong in the Dom-Post yesterday re IPOs. A good overview I thought. Not dismissing them out of hand, just a `buyer beware' kind of message. That seems more commonsense to me.


Placebo, do you have a link to the article?

Ummmm.... always do the opposite of what the funds do and you will make money. The funds are just a bunch of sheep sniffing eachothers butt. The more they discredit Pumpkin Patch IPO the more I like PP.

[Just_roll_it]

Where I work there are only 3 people (that I know of) that are active in the NZ and OZ share markets (me included). Recently, however, there has been a lot of talk around the office about IPO's, Pumpkin Patch in particular. We all know what that means, when all and sundry start talking about the share markets.....

That said, Pumpkin Patch still look to be one of the better IPO's.

JRI.

[Gryffyn]

PP looks like a sound proposition as a long-term growth company. The only rub is the IPO proce may be factoring in too much good news based on P/E and projected P/E.

[willy_wonker]

Gryffyn, Most private investors will get bugger all stock in the IPO. If the share price drops, great, opportunity buy some more. For those that cant get stock in IPO, good opportunity to get some if the share price falls on listing.



:)

[jlebed]

Offer & book build now over with resultant price set due Tuesday. Anyone got a pick for the final price?

Pumpkin Patch pricing no giveaway
http://www.stuff.co.nz/stuff/0,2106,2928486a1865,00.html

Also anyone know which brokers, aside from GS JBWere, actually had these things? Distribution seems to have been tighter than the final scoreline at the AB trial, & no public pool.

[mikescott]

I be hearing from Goldman Sachs that company it be receiving strong requirements for shares from Australian investors so NZ investors they be having little stock. This be meaning NZ investors have to buy from Australian investors when company it be listed? Australians they be thinking this company can be like the Billabong which is nice stock which make good profits for investors.

[willy_wonker]

I got some allocation from my broker. Hopefully it is not all hot air before IPO and deflated cold air on listing. Anyway, if it does come down on listing day, Willy is in to buy shares.

[Capitalist]

quote:Originally posted by brother coy
hahha donts worry suckers da next ipo will be da winner hahhhaaa


As Tempsky said, the IPO's separate the professional investors from the sheeple.

[warthog]

willy who is your broker?


quote:Originally posted by willy_wonker

I got some allocation from my broker. Hopefully it is not all hot air before IPO and deflated cold air on listing. Anyway, if it does come down on listing day, Willy is in to buy shares.

[willy_wonker]

quote:Originally posted by warthog

willy who is your broker?


quote:Originally posted by willy_wonker

I got some allocation from my broker. Hopefully it is not all hot air before IPO and deflated cold air on listing. Anyway, if it does come down on listing day, Willy is in to buy shares.



I have two brokers from large firms. Pumpkins are in high demand and everyone seems to want it, even the dorky funds are seeking a holding. Willy is a good client and gives his brokers good business, thus Willy can usually have good allocations. :)

But I am not confident PP will list at a premium, but the long term prospects looks good.

[warthog]

hi willy - thats why i asked you which broker you use. or is this a secret, for you fear, if you post the name(s) of the broker(s) here, they might be innundated with requests for firm allocations of IPO stocks.

if you don't want to share, just say so [:o)]


quote:Originally posted by willy_wonker


quote:Originally posted by warthog

willy who is your broker?


quote:Originally posted by willy_wonker

I got some allocation from my broker. Hopefully it is not all hot air before IPO and deflated cold air on listing. Anyway, if it does come down on listing day, Willy is in to buy shares.



I have two brokers from large firms. Pumpkins are in high demand and everyone seems to want it, even the dorky funds are seeking a holding. Willy is a good client and gives his brokers good business, thus Willy can usually have good allocations. :)

But I am not confident PP will list at a premium, but the long term prospects looks good.

[Nimble]

Children's clothing chain Pumpkin Patch said today it would issue shares in its initial public offer (IPO) at $1.25 each. The company had previously announced an indicative price range of $1.20-$1.40 a share.

[willy_wonker]

I will have to shop more at Pumpkin for presents. :)
What a wonderful store.

[mikescott]

This be good price?

WW are they going to give you big shareholder discount. The fad will be over soon enough.

[willy_wonker]

What fad?
PP has been around for awhile now. I just love their marketing, clothing and shop display. When you enter the shops and view their clothes, it touches your emotions. Now thats great marketing. Parents always put their kids first.

[willy_wonker]

The shares begin trading at 11am today.
Pumpkin Patch must conquer UK (DomPost)
09 June 2004
By ROELAND VAN DEN BERGH

Cracking the British market is seen as vital for the future prospects of retailer Pumpkin Patch as it prepares to list on the stock exchange today.

The company set a price of $1.25 a share yesterday for its initial public offering after a institutional book build last week. At that price, the company would be worth $208 million and would rank among the top 40 stocks.

The shares begin trading at 11am today. The price was near the bottom of the $1.20-to-$1.40 indicative range.
Alliance Capital portfolio manager Andrew Bascand said Pumpkin Patch was being valued at similar levels to other small New Zealand retailers such as Michael Hill.

"In that regard, it is probably a reasonably fair price."
Companies that were more brand-oriented, such as Billabong in Australia and Quiksilver in the United States had valuations 40 to 50 per cent higher, which showed how important it was for Pumpkin Patch to make it in overseas markets, he said.

Ten of Pumpkin Patch's 89 stores were in Britain, and wholesaling arrangements in the US and Ireland would provide upside for the company to grow, he said.

"At $1.25, very little of that growth is being priced into the shares. But they have to get their strategies up and running and deliver on them."

The British operation was not expected to make a profit for two years.
Pumpkin Patch would have to double the size of the chain there or move to a wholesaling arrangement to make that happen, Mr Bascand said. "This will make or break the company in terms of its growth profile."

The history of New Zealand companies expanding overseas was littered with casualties. Generally those that tried experienced "a hiccup or two" because brands were not easily transferable to other markets, Mr Bascand said. "When you look at the history of Pumpkin Patch, I believe there is a good chance that they have already had their hiccup."

In 2001-02 Pumpkin Patch wrote off $1.5 million of goodwill associated with the operation in Britain.
Mr Bascand said there had also been two notable international New Zealand brand success stories. The bigger was Bendon, of which Pumpkin Patch chief executive Maurice Prendergast was a director.

Both were apparel businesses - "basically turning cotton into brand".
The Bendon story was an example of a New Zealand and Australian brand that had transferred to the British market.
Pumpkin Patch had to go global, which had been a hard road for many New Zealand companies in the past, Mr Bascand said.

Of the amount raised, about $40 million would be used for expansion, $13 million on debt reduction and $60 million in a partial share buyback from existing investors including founder Sally Synnott.

Existing shareholders would retain a 42 per cent stake in the company.
Executive chairman Greg Muir said last week that Pumpkin Patch's debt would be modest if the bottom of the indicative share price was achieved and virtually nonexistent if it reached the top end of the range.

The company has forecast earnings before interest, tax, depreciation and amortisation of $26.7 million for the 2004 fiscal year, $10 million up on last year, and expects to reach $31.2 million by 2005.

Tax-paid profit is forecast at $11.5 million in 2004, before adjustment for an employee share plan, and $15.3 million in 2005.

[willy_wonker]

It looks like PP will list at a premium !

WOW, thats my first IPO that listed at a premium this year. No more tax loss !

[Halebop]

quote:Originally posted by willy_wonker

It looks like PP will list at a premium !

WOW, thats my first IPO that listed at a premium this year. No more tax loss !


Opening trades in the low to mid $1.30's - a respectable 6% gain.

I didn't take up any but will keep an eye on them. Well done WW.

[lucky]

The stags are roaring..........

[willy_wonker]

Thanks Halebop. I went into PP abit on a 50/50, cos the other IPOs was a flop. Anyway, you win some and you loss some.

I think the Aussies are buying up all the Pumpkins like the Chinese are buying up all the rice harvest. All good ! :) $1.34

[Scooter]

Scooter had some but finding it hard to see what the price is doing. Does anyone know a website that shows them

[willy_wonker]

Cantab, thanks mate.

Scooter, most broker website have price. Ring your broker up and ask them to give you a login password for online real time prices.

Currently trading at $1.36.
I think the funds are buying for indexing + Aussies love for Pumpkins.

[sharebattler]

Withou a broker site for live prices you could try http://www.nzx.com/ I assume they show a delayed price but it is better than nothing

[Scooter]

great, thanks all

[Long Strangle]

Well done guys. Looks like this one was priced perfectly.

[Nimble]

Glad I picked up a few shares in this care of GSJBWere. Spent a fair amount of time looking at all the other IPO's recently but this seemed to be the pick of them and only one I choose to participate in. Already a certain amount of growth priced in, hope UK comes right soon.

[Binklebonk]

There's no doubt that this is a quality company so no surprise it's doing well, but doesn't it also go to show if the price finally set is perceived as fair, then it will set the share on a positive price trend, whereas the reverse will occur if people investors feel the price set has been pumped the price will drop lower than what might be expected to be a good price

[sharebattler]

Extract of a article appearing in todays AFR ....

The Australian Financial Review - Page: 21 : 10-Jun-2004
Original article by Simon Evans
New Zealand-based children's clothing retailer, Pumpkin Patch, is keen to increase its presence in Australia. After a successful debut on the New Zealand Stock Exchange on 9 June 2004, the Pumpkin Patch has indicated that trans-Tasman growth is its new priority. MD Maurice Prendergast says the company is considering its growth options, and will focus on enhancing its profile in Australia's David Jones department stores. Shares closed at $NZ1.38 on 9 June, some 5.6 per cent more than the $NZ1.25 issue price.

[cruisader]

At last a well priced float, with unsatisfied buying. Well done to the vendors and the Investment Bankers who finally figured out what it means to leave enough on the table for the next guy.

[warthog]

quote:Originally posted by sharebattler

Extract of a article appearing in todays AFR ....

The Australian Financial Review - Page: 21 : 10-Jun-2004
Original article by Simon Evans
New Zealand-based children's clothing retailer, Pumpkin Patch, is keen to increase its presence in Australia. After a successful debut on the New Zealand Stock Exchange on 9 June 2004, the Pumpkin Patch has indicated that trans-Tasman growth is its new priority. MD Maurice Prendergast says the company is considering its growth options, and will focus on enhancing its profile in Australia's David Jones department stores. Shares closed at $NZ1.38 on 9 June, some 5.6 per cent more than the $NZ1.25 issue price.


Somebody needs a new calculator.

[sharebattler]

Warthog, glad to see you picked up the mistake, just goes to show that you cannot take for granted eveything you may read even if it is in the AFR, supposedly Australia's leading financial newspaper.
The whole area of financial journalism IMO leave a lot to be desired. In this case I would think is as you suggested a mathematical error but the question could be asked just how much of a journalists published copy is from their own investigative work or comes more or less directly from information supplied by a company trying to spin their own slant on a story.

[mikescott]

Well, $1.70 (36% up on issue price) and not a whisper or comment! Especially from the doubters and crowd followers! [^]

That's the problem with the NZ market - punters not being able to differentiate between quality offerings (and you pay a decent price) versus micky mouse offerings like Mike Pero, Direct Finance, Fool-To-Be (FTB) etc....

Also, punters believing bullshxt forecasts (like Fools-To-Be FTB) whilst discounting good company's conservative forecasts.

More for those who do their homework......[:p][:p][:p][:p]

[mikescott]

$1.75 and climbing.

So much for the doubters and the fools-to-be (FTB) pushers. [^]

[Binklebonk]

Also Fishers have been buying up and now have 5% which is a big vote of confidence

[Halebop]

Anyone read the PP story last weekend? Although I would not have bothered to respond to Mr Inder, Pumpkin Patch obviously felt stung into action by his comments. I personally discounted his views. I can only imagine he's a disgruntled WHS shareholder or something...

Pumpkin Patch responds

28.07.2004

Last Saturday's Weekend Herald Business carried comment on Pumpkin Patch's recent profit upgrade announcement by the new editor of the Business Herald, Richard Inder.

Inder's comments reflect a misunderstanding of basic accounting and investment analysis, all wrapped up with a personal attack on our chairman, Greg Muir.

The core thrust of Inder's article is that "A doubling of forecast profit in the space of just three months is just too great." Such an analysis of our announcement is very concerning. The facts of the matter are these:

The Pumpkin Patch Board considered our prospectus financials on the basis of the March YTD results - the prospectus went to the printers on the 8th of April. The upgrade was issued 15 weeks after the prospectus numbers were completed. The prospectus was very clear in declaring the basis of the offer.

Inder's assertion that the "original forecast, made in April, was set out in the prospectus for the group's float just seven weeks ago" is misleading.

The profit upgrade released last Tuesday contained just three prime causal factors - none of which were known to the directors at the time the prospectus was signed off for printing.

* Better than expected sales in May, June and July in the UK and our wholesale business.

* Better than expected margins in Australia and New Zealand over this period.

* The decision to use a tax-effective support payment to our UK subsidiary - which has the effect of bringing forward the utilisation of UK tax losses. This is simply a timing issue that has very little impact on our stock's valuation.

The latter item may give an accounting novice the impression the profit had doubled. To everyone else it was obvious the profit had increased just 15.5 per cent (approximately - using the midpoint of our announcement).

This very point was discussed at some length with the Herald's reporter when she called our chairman on Tuesday. She has told us that she explained the accounting treatment to Inder before he wrote his story.

Surely the best test of Inder's accusation is the movement in PPL's share price. Had our profit "doubled" you would have expected a price increase significantly more than the 14 per cent it moved. Clearly "the market" understood our announcement, even if Inder didn't.

Interestingly, there is a direct comparison across the Tasman. Just Group, a transtasman apparel retailer, floated on the ASX on May 7, 2004.

Last Tuesday they announced a 12 per cent to 15 per cent increase in ebita over their prospectus forecast - due to better than expected trading performance. The Sydney Morning Herald reported this occurrence factually on July 23 without any of the confusion featuring in Inder's article.

Business editors are paid for their judgment. They should be made to apologise when they get it wrong. More to the point, their opinion pieces are something ordinary readers should be able to trust.

- David Jackson, partner, Ernst and Young, chairman of audit committee and independent board member - Pumpkin Patch.

* Richard Inder replies: I reject the claim that my comments were misleading and stand by my opinion.

[lewinsky]

Minder,I agree that PPL has more substance than DFH and MPM,however can you quietly grab a cigar and a double Manuka Honey FTB and check my maths on this.
FTB Ords trading at .46
FTBWA free option at .13
FTBWB free option at .18
Total FTB value .77
Issue price .50
Increase in value .27
Percentage Increase 54%
PPL latest price $1.75 increase in % terms 40%.
I am picking both of these to head north over the next 12 months.

[Futurz]

quote:Originally posted by lewinsky

Minder,I agree that PPL has more substance than DFH and MPM,however can you quietly grab a cigar and a double Manuka Honey FTB and check my maths on this.
FTB Ords trading at .46
FTBWA free option at .13
FTBWB free option at .18
Total FTB value .77
Issue price .50
Increase in value .27
Percentage Increase 54%
PPL latest price $1.75 increase in % terms 40%.
I am picking both of these to head north over the next 12 months.


I don't want to rain on your parade... but you need to divide the price of each warrant by 6 and then add it to the share price to get the true value of FTB. Remember there was only 1 warrant issued for every 3 shares and the warrants were split into two groups A's and B's. So the combined warrant value would be 0.052, add this to 0.46 and the value is only 0.512, a modest 2.4% increase.

[lewinsky]

Bugger,knew there must have been some fault in my logic.Bback to the brrom cupboard

[winner69]

quote:Originally posted by minder


Well, $1.70 (36% up on issue price) and not a whisper or comment! Especially from the doubters and crowd followers! [^]

That's the problem with the NZ market - punters not being able to differentiate between quality offerings (and you pay a decent price) versus micky mouse offerings like Mike Pero, Direct Finance, Fool-To-Be (FTB) etc....

Also, punters believing bullshxt forecasts (like Fools-To-Be FTB) whilst discounting good company's conservative forecasts.

More for those who do their homework......[:p][:p][:p][:p]





A couple of months on and about to hit 200

Solid buying the last week or so .... I think minder did say 240 as his target

Obviously a lot more to come

[star]

Looks like some fund managers or institutions keep building up stock.

PPL has a long way to go.

[nelehdine]

shades of "panic" buying going on here ???
+10 to 208
P/E must be approaching 20 now ... for a retailer in the rag trade quite amazing

Disc: none held

[The BOWMAN]

The volumn traded within the last hour is incredible. Something big is about to happen...

[winner69]

A sudden awakening methinks

Minders 240 is still on the cards before xmas

Unlike FTX be fair about setting the IPO price .... deliver the goods .... and shareholders will be rewarded.

[winner69]

Mean't to remind you yesterday that PPL announce today (I think)

Even better than that raised forecast result ... improving margins (unlike WHS) ... and good prospects

Like HLG positive result from punters today and lo behold it reaches 240

Just like minder said it would

WONDER WHERE MINDER IS?

[KJ]

My first look at this-but NPAT of 8m-PE of 40-I must have something wrong?

[Nimble]

KJ,
Agree current PE is HIGH. Investment statement forecast NPAT of 15.3 for 05 which would give it a forward PE of 21.8.

The 04 result at $8.1M is $4.1m or 100% ahead of forecast which was for $4M. So brokers are likely to lift 05 figure as well. Say 15.3 + 4.1 = 19.4 giving forward PE of 17.

[Bling_Bling]

I got some PPL in the IPO. Am happy to hold. Good management and marketing. :)

[Snow Leopard]

Statement says eps of 6.14c and the number of shares is 166,513,000
which gives $10.2 million.
This does not make sense to me, surely an eps of 4.85c would be correct?

An SP of 240 would express a ridiculous degree of optimism surely?

[Binklebonk]

A great result.
I did my own back of envelope stripping out the abnormals and looking at the forward momentum got around $20m - same as Nimble.

That makes PE of 12 if there are 166m shares (per PT), whereas Nimble has PE of 17. Not sure what the story is there???

[Snow Leopard]

quote:Originally posted by Binklebonk

A great result.
I did my own back of envelope stripping out the abnormals and looking at the forward momentum got around $20m - same as Nimble.

That makes PE of 12 if there are 166m shares (per PT), whereas Nimble has PE of 17. Not sure what the story is there???




Sorry to correct you Binklebonk, But:

20M by 166M shares is an EPS of 12cents per share.
P/E is SP/EPS = 210/12 = 17.5

I think you have confused EPS and P/E.

[Binklebonk]

Thanks PT, a bit expensive then.
Also Amro's just came out with a valuation of $1.81

[winner69]

...and reached 225 today

That 240 of minders not far away

No reason why the ride shouldn't continue

[Bling_Bling]

This is a growth stock, so a high P/E is normal. They continue to surprise the market on the upside which is always a good sign of more to come.

[star]

The P/E ratio in the NZ Herald included the one-off item of $8m restructure cost. If we add this item back to NPAT the EPS is 10.2c. At $2.20 per share, the P/E is 22. But forward P/E should be much lower than 22, and analysts still wait for the 2005 forecast earnings consensus to revalue this stock.

[kura]

MacQuarrie research puts a DCF value of $2.55 on them.

[star]

PPL has given me over 50% return to date. Here is a new article from Australia Investment Review:
http://www.aireview.com/index.php?act=view&catid=2&id=881

The target price for next 12 months is $2.4 and the rating from Citigroup is Buy.

[nelehdine]

Bailed today at 232 having jumped in about 6 weeks at at 199. Very pleased with my profit but feel that retail is going to have a pretty average Christmas and there are better opportunities elsewhere.

Disc Sold 2965 PPL at 232
Funds re-invested in POT at 565

[Bling_Bling]

What a beautiful graph this little baby has. :)

[Placebo]

Little baby indeed ;)

Mrs Placebo and I have been doing our bit for the bottom line by adding a further sprog, and encouraging a frenzy of gift-buying. How many hats, socks and OOO body suits does one baby need?? Had the joy of visiting the new PP store in Johnsonville, lovely big store, heaps of stock, quite a few people in even though it was midweek and outside the main shopping area (carpark adjacent).

[SueJ]

PPL just traded at 2.40 - nice one, Minder.

P/E ratio around 49.5.

(disc hold PPL)

[Bling_Bling]

I am having pumpkin soup tonight ! :)

[star]

I went to Pumpkin Patch shop in St Lucks last Sunday. The shop was very busy, full of parents and children. The presentation, variety of choice, the style and the design are absolutely the best in New Zealand. Lots of women said, they love the Pumpkin Patch stores.

I predict PPL will grow substantially in the next 3-5 years.

[SueJ]

A little feeding frenzy today. 190K+ shares sold so far; price up 15 to 262. This share makes me slightly nervous: is it a mini bubble? An overblown pumpkin?

(disc hold PPL)

[Bling_Bling]

It is a beautiful bubble full of colours in my portfolio. :):):)

[Anna Naum]

Notice a lot of stocks that Fisher Funds own were up today. Spoke with my broker and he suggested they had recently got some new money from the govt super scheme, maybe some buying from Fishers pushed things along

[halcyon9]

another BGR:( doubled then halved

be careful/watch out


forward PE looking as fat as a pumpkin patch kids face


50+ and expanding

[winner69]

quote:Originally posted by halcyon9

another BGR:( doubled then halved

be careful/watch out





Interesting observation H9 - actually PPL is rising faster than BGR did

Plotting PPL and BGR on a weekly basis from IPO date (ie weeks listed) is pretty scary if you are a PPL shareholder - the lines are tracking each other to date .... but will PPL keep it up

From the chart -

** Both ended ist week after IPO at about 140

** After 20 weeks BGR was 210 and PPL 211

** After 27 weeks (last Fri and the time PPL has been listed) BGR had only increased to 227 while PPL has gone to 257

** BGR got to 275 in week 40 before drifting a bit and got back to 280 in weeks 54 and 55 ... and we know what has happened since as the high expectations were not met

[winner69]

quote:Originally posted by halcyon9


forward PE looking as fat as a pumpkin patch kids face 50+ and expanding


Did say at AGM confident that the prospectus forecast of $15.3m full-year net earnings will be comfortably exceeded.

So at $15.3M PE is about 28

Say thay make $20M forward PE is about 21 .... so not too bad

The crunch will come when there are some hiccups on the way - isn't this what this statement from the AGM hinting at 'However the issue I wish to emphasise today - and will continue to highlight at future presentations - is that investors should not necessarily expect our growth to progress in a linear fashion.'

[Binklebonk]

Profit upgrade now more than $23m! +30c to 280c in morning
No wonder the firming

[Bling_Bling]

quote:Originally posted by halcyon9

another BGR:( doubled then halved
be careful/watch out
forward PE looking as fat as a pumpkin patch kids face
50+ and expanding


There is a difference between BGR & PPL. Thats why I have PPL and NO BGR.

1. PPL is very successful in NZ & Aussie and England is looking GOOD.
2. BGR is NZ only, limit growth.
3. PPL has wonderful products and marketing. BGR is still wondering around the dark bushes in their marketing.
4. People will always spend money on their kids first.

I agree the PE is very high, but PPL have yet to disappoint the market. Those that got their shares in the IPO is happy as Larry. :)

[SueJ]

Husband looked in to Pumpkin Patch store in Riccarton on Saturday morning & he says the tills were going "Bling a bling a bling"!

[Bling_Bling]

quote:Originally posted by SueJ

the tills were going "Bling a bling a bling"!



Yes, I can here the beautiful sound from here. :)

[star]

Hi guys

This is a real star! Beautiful company, beautiful design, beautiful colour and beautiful material. The Pumpkin Patch stores really capture parents and children’s hearts.

At $2.8 per share and $23m net profit next year, the P/E ratio is 20. It is still cheap for a small fast growing company.

OR is it time to sell People were saying this about BGR & WHS not long ago

[halcyon9]

watch the market rush in and buy buy buy PPL


BGR


$1------->$2.80-------->$1


where will you be?

[leanmeanfightingmachine]

The big difference between BGR and PumpkinPatch. To many BGR's not many P.Patch's.

Mothercare is a little dry in the UK, so they should do well there. Not sure about Aus does anyone no what other big players are over there?





quote:Originally posted by ENIGMA

OR is it time to sell People were saying this about BGR & WHS not long ago

LMFM Just another fashion fad that could be gone tomorrow. Have a look at Globe & Billabong on the ASX & tell me why PPL will be any different. To much hot air.
Star a PE of 20 for a fashion company I would think twice about buying at a PE of 8.

[Phaedrus]

Halcyon9,
You seem to operate in a market where selling is forbidden! To use BGR as a cautionary $1 - $2.80 - $1 tale is to totally miss the point that many people made a lot of money in a short time with this stock. Of course, many lost a lot, too. Who were these "unlucky" people?
(1) Diehard "Buy and Hold" advocates
(2) Those that totally ignored market trends
(3) Those that "averaged down", buying as BGR fell.
Just like the Warehouse!!!!! The same groups will probably lose money on Pumpkin Patch too.

Take a look at the charts below. All 3 stocks show very similar nice tidy confirmed trendlines. I have marked any trendline break Sell signals with red arrows. You can see that these gave good timely exits, retained most of the accrued profits and got you out well before the major falls that followed.

While you are preaching caution with Pumpkin Patch, others are making huge gains. All they have to do to lock these in is to sell at the trendline break - whenever that is. PPL will peak and go into a downtrend, but there is no need whatsoever to ride that downtrend to the bottom. Only fools do that.

http://home.ripway.com/2003-11/39768/3UT002.gif

[marcus_milo]

quote:Originally posted by Phaedrus

Halcyon9,
You seem to operate in a market where selling is forbidden! To use ...


Nice point with the graphs. However I wonder what the trend line prediction on the BGR and WHS would be if you did them only halfway through the graphs you displayed. I think they would both show earlier selling. Retospective analysis is a little easier than predictive analysis.

However, I believe that PPL are very highly priced. I thought it was reasonably optimistic them making upping there full year profit forecast 8 month in advance. What do they base that on the? The last 3 months running up to Xmas?! Things move fast in the world, especially in the UK where costs are higher.

My 5 cents.

[Placebo]

Well my comment would be that they wouldn't be predicting to make money in the UK (reversing a prediction of loss in earlier forecasts) if they didn't feel they were able to make it. PPL is led by Greg Muir, the man in charge of the Warehouse UP UNTIL its disastrous foray into Australia. I consider him to have the integrity to deliver on the promises he makes. So an expectation that PPL will be profitable in NZ, Aust and UK is a very bullish signal indeed.

What I find interesting is their also signalling a move into the US. Now there's a big market where the rewards are potentially huge. But then again, so are the risks...

[limegreen]

quote:I think they would both show earlier selling.

I'm going to attempt a response, but this obviously doesn't reflect Phaedrus's perspective.
Briscoes has two touches (orange arrows) within the first three months to set that trendline. However, fitting a more aggressive trendline (limegreen line) would have yielded a similar amount of money, but had you out a few months earlier.

If you look at WHS on a longer timescale, you'd see that that trend was also in place, even though it only appears to do two touches in the chart presented. Alternatively, more aggressive lines could have been fitted as shown.

http://img.photobucket.com/albums/v361/limegreenz/phaedrusaltered.gif

<s>It's also worth noting that the PPL chart does not have the benefit of hindsight, but does show a good strategy for protecting capital (ie, selling when the trend is broken).</s>

The PPL chart is a clear example of how a trend can be put in place before it is broken, thus negating any suggestion that trendlines are artefacts of hindsight.

[Phaedrus]

LG,
You observe "It's also worth noting that the PPL chart does not have the benefit of hindsight", the implication being that the other two charts have derived some sort of benefit from hindsight. Not so at all. The medium-term trendlines that were broken in the other 2 charts could not have been drawn anywhere else. They were in place, confirmed, intact, permanent and immovable months before they were broken.
You may be interested in looking at a WHS chart drawn less than 2 weeks before the trendline break. Take a look at :- http://www.sharechat.co.nz/archives/2002/07/msg00134.shtml
No hindsight there - right?
So why should there be any suspicion of hindsight when the same trendline eventually gets broken?

[limegreen]

Sorry, P., I was not meaning to imply that the other charts did have the special benefits of hindsight. In fact, I had hoped I was trying to show that they were in place.
My phrasing with respect to PPL was sloppy in retrospect. What I meant was "The PPL chart is a clear example of how a trend can be put in place before it is broken, thus negating any suggestion that trendlines are artefacts of hindsight".

[Phaedrus]

You know, Limegreen, I thought you might have meant that. The word "hindsight" is like a red rag to a bull for me at the moment!! It is such an easy charge to make, and so hard to refute. A bit like calling a car "tinny".
I'm just lucky that I still have links to the old WHS charts I posted years ago, enabling such accusations to be totally discredited, in this instance.

[limegreen]

Yes, I had rather thought your response was somewhat coloured by other recent posts. As a professional number cruncher and trend analyser, I'm rather taken by charting, so I'm fairly convinced of its merits.

[halcyon9]

[quote]Originally posted by Phaedrus

Halcyon9,
You seem to operate in a market where selling is forbidden! To use BGR as a cautionary $1 - $2.80 - $1 tale is to totally miss the point that many people made a lot of money in a short time with this stock.



....so from what I said is to "totally miss the point"

and what "was" the point Phaedrus???

that people made $$$ from $1 to $2.80? really!!! incredible
I didn't know that.


maybe that's why I said "where will you be"? which you conveniently left off your little "hindsight" example.


did you buy at the lows and highs of BGR and WHS?
Do YOU have PPL from IPO???

No, my guess is you have a little bee in your xmas bonnett.


all I am saying is be careful now at $2.60-80, it's that simple.

[winner69]

And still this little baby continues it relentless climb ... 280 this week.

Minder said 240 earlier on in this thread ... wonder where minder is these days

Even so PE remains less than 20 ... and not that much more than WHS ... wonder which is the better buy.


Control the manufacturing of their product ... run their own retail stores ... great brand ... drives great margins .... concentrating on core competencies .... gradual global expansion.

All the ingredients for success (sounds a bit like MHI doesn't it ... but better)

At least Muir as found something he can put his skills to work and be supported for doing it.

I was prepared to take some profits at 200 but didn't and there doesn't seem any reason why I should be tempted at 300. While others want to jump on the bandwagon i may as well stay on as well.

[winner69]

Another 6 cents today

That $3 getting closer and closer

[Sky Tower]

quote:Originally posted by winner69

Even so PE remains less than 20 ... and not that much more than WHS



PE less than 20 ???? you sure ??
I think if you crunch the numbers yourself you will come out with a figure higher than 20.
In fact much much higher [:p]

[winner69]

quote:Originally posted by dnicholls


quote:Originally posted by winner69

Even so PE remains less than 20 ... and not that much more than WHS



PE less than 20 ???? you sure ??
I think if you crunch the numbers yourself you will come out with a figure higher than 20.
In fact much much higher [:p]


They say NPAT this year of not less than $23M - about 14 cents/share

Price 280 PE 20 max (if as they say 'current trading conditions continue')

As long as punters are willing to continue to buy than i am willing to hold

[Sky Tower]

Thank you for your postings Rocking. At least you had the figures to back up your comment - and you were prepared to disclose them.

Ive been reading PPL wrong right from the beginning when a friendly broker rang me up and offered me and allocation and I said NO! :(

[winner69]

More fun than NOG this at the moment

Now only 6 cents away from $3

Closed at the high for the day so positive momentum apparent

Plenty of buyers still interested by the looks of it

[winner69]

Now 6 cents over that $3

Up 20% in the last 8 days .... more fun than NOG

Who said retail is dead? Good brands ... control of manufacturing and distribution ... keep an eye on those margins ... promote by other means than heavy heavy desparate discounting ... keep the punters happy .. and retail can be a gold mine

Still no reason to sell ... looks like a lot of buying demand still out there

Come on $4

[winner69]

Yes 310 close for the week ... great week for this young star

Uo 30 cents or 11% .. not a bad weeks work

Still talking to myself here but silence can be golden

[Snow Leopard]

So now trading at a P/E of 22 on forecast earnings for the current year.
Can they maintain the growth to continue the share price growth?

[winner69]

PT - PE of 22 is not much 'premium' to the over market at the moment

Even WHS is still 17-18

[Snow Leopard]

Given a choice between PPL @ 22 or WHS @ 17 then PPL is my choice [:p]
However I ask the question because I do not know the answer and would be interested to find out.
So, can they maintain the growth to continue the share price growth?
Oz is currently a major market for them and slowing down maybe?

[Shamrock]

A P/E ratio is a crude instrument to compare share price vlue if not used in conjunction with the performance prospects of the company concerned. That is why I use PEG analysis to arrive at my shortlist of companies to trade.

Based on this alone, PPL outstrips WHS hands down

[winner69]

And still they queue to buy

PEs or PEGs (only to hang the clothes on Shamrock) when sentiment runs hot

Maybe that $4 is not a pipe dream after all

[lambton]

quote:Originally posted by winner69

And still they queue to buy

PEs or PEGs (only to hang the clothes on Shamrock) when sentiment runs hot

Maybe that $4 is not a pipe dream after all


And I bet one of them is Fisher Funds buying up large (see earlier notices). Hope they're not the only "significant" buyer because we all know what happens when the "significant" buyer wants out.

[Bling_Bling]

Bling Bling is out. Thanks for coming. A profit is a profit and who knows where it will go. :):):)

[Sky Tower]

Bling Bling
If you got in at the initial IPO you have done very well
I have to wonder just how much is left in this stock
Issued at $1.25 Closed today at $3.15
Nice 238% profit !! er I mean 152 % profit or similar - dam calculator

[Bling_Bling]

Sky, I bought some at IPO and also on listing. :)

[spector]

quote:Originally posted by Bling_Bling

Bling Bling is out. Thanks for coming. A profit is a profit and who knows where it will go. :):):)


Nice work Bling, where are you thinking about investing your gains?

[Bling_Bling]

Spector, dont know. May keep the cash in the bank until something juicy comes along. I hear there will be some good IPOs coming this year. But have to becareful now as the market already run too hot. Must pick and choose the right ones.

GLS still looks like good buying for long term. A company looking to grow offshore, inbound traffic, mergers and acquisitions and techonolgy. Tourism industry is going through consolidation worldwide. This can only be positive for GLS. Blings has plenty of GLS.:)

[winner69]

Looks like 316 might have been the top this time around

Hasn't broken any of the trend indicators yet ... next week might give a better idea where it is heading

But then when least expected somebody wants a dollop and she takes off again

[Shamrock]

Little short-term downtrend in place now...I don't know whether that will be the start of something more bearish but I'll be waiting for this wee trend to reverse before dipping my toes in

Provided the main uptrend is still in place of course - hopefully we'll see further weakening of the price and a reversal to confirm the major uptrend

[winner69]

Yeah looks like this ride might be over

A short term downtrend forming .... and the long term uptrend under threat

The other thing that seems to come into play is round numbers ... 300 has a certain ring about it and now it has fallen below that mark might find 300 a bit of resistance

But something might come out of the woodwork tomorrow ... come on you fishbroker and your mates

[Bobby_Fischer]

Shoeshine's opinion in Friday's NBR was that it's overpriced. May account for the drop today?

[Shamrock]

Winner, you could be right about 300...plenty of sellers lined up at that price

[Bling_Bling]

PPL dropped 4% today. Wonder whats up. Is it an opportunity or is there more behind the scenes... ummmmm.

Whats up??

[Steve]

Being over-priced has finally caught up with it?

Just my 2c...:)

[winner69]

Good while it lasted

Now back on the watchlist until the chart looks more promising

Wonder if it was shoeshine saying it was overvalued "for now" or jsut a whole lot of profit taking

Brillant company, great concept and all that or stuff ... but what is it worth?

[winner69]

quote:Originally posted by winner69


Plotting PPL and BGR on a weekly basis from IPO date (ie weeks listed) is pretty scary if you are a PPL shareholder - the lines are tracking each other to date .... but will PPL keep it up



H9 said that PPL could do a BGR ... double in price and then collapse so I started a weekly chart comparing the PPL and BGR shareprice from the time they listed .... and it is still rather scary

Remember both BGR and PPL were about 140 after Week 1

BGR rose steadily and had its 1st peak in weeks 38-40 (price 270/275) ... fell away to 235 before peaking again in weeks 54-55 (price 280) ... and we know all to well what has happened in the following 112 weeks

PPL has gone slightly higher tha BGR (+130% for PPL compared to +100% fpr BGR) but the scary thing is that PPL is now in Week 38 (since it listed) .... and the price has started to fall away !!!!!

If PPL follows the BGR trend then expect PPL to go 250/260 over the next 4/5 weeks but be back over 300 in 15 weeks time .... before drifting all the way down to 120 in 2 years time

A bit of trivia but you never know there might even be some scientific or other behavioural stuff that supports this hypothesis

Don't have a clue how to post this chart but it is interesting.

[Bobby_Fischer]

quote:Originally posted by winner69

Wonder if it was shoeshine saying it was overvalued "for now" or jsut a whole lot of profit taking


The later, triggered by the former perhaps?

[Phaedrus]

PPL is showing clear technical evidence that its meteoric rise is weakening.
The following indicators have all given Sell signals for the first time since listing :-
(1) 14 day Directional Movement Indicator
(2) 30 day Simple Moving Average
(3) 8% Trailing Stop
(4) On Balance Volume trendline break
Note that this stock is still in a long-term uptrend, and that the confirmed long-term trendline has not been broken yet.

http://home.ripway.com/2004-7/148483/PPL004.gif

[rotsevni]

quote:[i]
Note that this stock is still in a long-term uptrend, and that the confirmed long-term trendline has not been broken yet.

http://home.ripway.com/2004-7/148483/PPL004.gif

I only had a small holding left so I cleaned it out today.
Was that a dumb thing to do based on the chart above?

[winner69]

quote:Originally posted by rotsevni
I only had a small holding left so I cleaned it out today.
Was that a dumb thing to do based on the chart above?


hindsight would say yes

In haste sold as well and to get back on the wagon has cost 25 cents plus 2 lots of brokerage. Should have believed the great brand story.

How valuable is this company? Market cap now $575M ... 'fundamentally' probably is too high but who cares while all this positive sentiment is around ... everybody including the taxi drivers want to be part of the action ... more exciting than NOG

[mistymountains]

Small company going global with a successful formula always was/is going to be successful....

Time now to predict where the growth will go globally. Think globally, act locally??!!

Forget the market analysis think of the big picture!

[Snow Leopard]

quote:
Citigroup downgrades Pumpkin Patch to sell
14 April 2005

MELBOURNE: Citigroup lowered its recommendation on children's clothing retailer Pumpkin Patch Ltd to a "sell" and cut its fiscal 2005 profit forecast by 3 per cent to $NZ23.7 million.


Citigroup said the downgrade reflected its view that the British arm would slip back into the red in the second-half as retail conditions weakened, earnings would be hurt by quota system changes, and a long, hot summer in New Zealand would trim second-half sales of autumn and winter clothes.

The broker also cut its fiscal 2006 earnings per share forecast by 9 per cent to $NZ26.3 million following Pumpkin Patch's plan to expand into the United States, where the group expects it will take four to five years to break even.

"Operationally we continue to view the company's business model and management highly and view its long term prospects very favourably," Citigroup said in a research note.

"That said, the next 12-24 months will prove more challenging with retail conditions slowing and the company testing another growth opportunity." Pumpkin Patch shares fell 4.1 per cent to $NZ2.80 in early trade, underperforming a modest fall in the broader market.

[StainlessSteelRat]

quote:Originally posted by winner69


quote:Originally posted by rotsevni
I only had a small holding left so I cleaned it out today.
Was that a dumb thing to do based on the chart above?


hindsight would say yes


Not so sure. The downward trend has taken hold since the announcement of a move into the US market. It seems that "the market" doesn't think they're ready for such a huge step.

[winner69]

Fisher Funds drive the price up in their regular shopping sprees and Citigroup drive it down when they do a little adjustment to their forecasts

Agree with the metal rat that a major reason for it going downhill could be owing shops in the US ... does seem strange that PPL is down 45 cents since the announcement and was dropping before the Citigroup note

Still at about 20 times forecast earnings and won't it get hammered if it doesn't deliver

However Fisher Funds will no doubt give it another boost again in the not too distant future

[Anna Naum]

Another stock owned by Fisher Funds and going down fast

THE KING says when all is said and done it a shop where KIDS go to shop i bet they dont have much money so mum comes along and saves the day now when MUM has NO money the KIDS shop will CLOSE.. [^]

[Studson]

The latest HY report. 290K through in the last 15 minutes.

http://www.pumpkinpatch.biz/documents/704_PPL_Appendix_1_Jan_2005.pdf

[lucky]

MUM will always have money king

[lucky]

or else DADDY will have no fun

[FYA4999]

Pumpkin Patch results coming out next week. The share price has headed up sharply. Is the market expecting stella results? Any thoughts about what kind of results to expect?

[Snow Leopard]

quote:Originally posted by FYA4999

Pumpkin Patch results coming out next week. The share price has headed up sharply. Is the market expecting stella results? Any thoughts about what kind of results to expect?

Stellar one?

Disc: it's friday :D

[haka]

quote:Originally posted by cujodog

This is a complete joke how a share like Pumpkin Patch keeps going up and up. Give me a break!!


You obviously have none. :D

Look at Billabong in Australia for guidance. [^]

[leanmeanfightingmachine]

massive one going to hit shores.



quote:Originally posted by FYA4999

Pumpkin Patch results coming out next week. The share price has headed up sharply. Is the market expecting stella results? Any thoughts about what kind of results to expect?

[Snow Leopard]

quote:
Pumpkin Patch Limited
Full Year Ended 31 July 2005

This report has been prepared in a manner which complies with generally accepted accounting practice and gives a true and fair view of the matters to which the report relates and is based on audited financial statements.

CONSOLIDATED OPERATING STATEMENT
Current Full Year NZ$'000; Up/ Down %; Previous Corresponding Full Year NZ$'000

TOTAL OPERATING REVENUE: $280,378; Up 27.3%; $220,292

OPERATING SURPLUS BEFORE UNUSUAL NON RECURRING ITEMS AND TAX: $36,961; Up 82%; $20,304

Unusual non recurring items for disclosure:
One off costs associated with the market research and market entry strategy for the United States retail operation: $1,152

OPERATING SURPLUS BEFORE TAX: $35,809; Up 216.3%; $11,321

Less tax on operating result: $11,210; Up 245.9%; $3,241

OPERATING SURPLUS AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER: $24,599; Up 204.4%; $8,080

Earnings per share: 14.77cps

Final Dividend: 4.25cps
Record Date: 7 October 2005
Date Payable: 18 October 2005

Tax credits on final dividend: Fully imputed for New Zealand residents; Fully franked for Australian residents; Supplementary dividend payable to non-residents.


full announcement here (http://www.nzx.com/market/market_announcements/by_company?id=120619)

[rmbbrave]

Pumpkin Patch reveals bumper full year harvest

13.09.05 10.10am


Childrens' clothing retailer Pumpkin Patch today unveiled a bumper full year harvest, reporting a net after tax profit of $24.6 million.

The result triples last year's $8 million figure and matched analysts' expectations of between $24-25m.

Pumpkin Patch also declared a final dividend of 4.25 cents per share.

Shares in the retailer closed yesterday at $3.30, having crept as high as $3.40 in the past week in anticipation of the result.

Pumpkin Patch's reputation for under-promising and over-delivering has seen its share price climb rapidly since listing in June last year at $1.25 a share.

Today's result excludes a one-off cost of $800,000 relating to Pumpkin Patch's push into the United States market. Taking that into account, the result is 64 per cent higher than the net after tax profit, excluding unusuals, of $15.5m posted a year earlier.

Analysts were keenly eyeing the result for signs of how the retailer weathered the unseasonall warm winter.

Total operating revenue in the year to July 31 climbed 27 per cent to $280m. Sales growth was widespread.

Earnings before interest and taxation (ebit) for the period was $37.5m, up 64 per cent on 2004.

In New Zealand, retail sales grew to $57.8m, up 26 per cent on 2004.

This was due mainly to the effect of a full year trading from 14 Urban Angel stores (the rebranded HBK stores purchased in May 2004) and new store openings.

Excluding Urban Angel stores, turnover from Pumpkin Patch stores was up 16 per cent on 2004.

New Zealand ebit increased 15.7 per cent to $10.6m.

During the year four stores were opened, taking total store numbers to 45. The retailer plans to open one new Pumpkin Patch and two new outlet stores in 2006.

The retailer's Australian stores achieved sales of A$141.4m ($156.34m), up 17 per cent. Pumpkin Patch now has 75 stores across the Tasman, 11 of which opened in 2005 -- seven in the second half of the year.

Australian retail ebit was up 27 per cent to $29m, and Pumpkin Patch plans to open another 10 stores , including two outlet stores, in 2006.

In the United Kingdom, turnover for the year was £10m ($26.21m), up 43 per cent on 2004.

"Considering the soft nature of the United Kingdom retail environment the company is very happy with this sales result," Pumpkin Patch said.

During the year 7 new stores were opened, taking the total number of stores to 16.

The ebit for the year was a loss of $300,000, compared with a loss in 2004 of $1.3m. Pumpkin Patch plans to open six new UK stores in 2006.

Turnover from Pumpkin Patch's wholesale and direct business rose by 139 per cent to $38.2m. Turnover increased across all major wholesale markets, especially the Middle East, the United States, and Ireland.

The segment generated ebit of $9.6m.

In the United States, Pumpkin Patch opened its first retail store in July. It is "too early to make any comment regarding levels of trading", although feedback from customers has been "very favourable".

The investigation and development process incurred a one-off after tax cost in 2005 of about $800,000 ($1.1m before tax).

Pumpkin Patch has leased three additional stores; two in Los Angeles and one in the San Francisco Bay Area. The stores are expected to open in 2006.

Looking ahead, Pumpkin Patch expects overall retail trading conditions to be less buoyant in 2006. However it is confident that its brand strategy will continue to generate strong trading performances.

- NZPA

[Bling_Bling]

ummm.... PE 22x

Retail forecast to be less buoyant for 2006.

[icehot]

quote:Originally posted by Bling_Bling

ummm.... PE 22x

Retail forecast to be less buoyant for 2006.




On that basis, PPL was too expensive at $1.25 IPO price as profit then was $8.1m and PE was 25.8x. Go back to finance 1 and read prospective pe.

[marcus_milo]

Why the drop in share price with large volume?

[Snow Leopard]

see post by bling bling for one possible answer.
edit to: see either post ( the one up their or the one down here) by bling bling for possible answers :D

[Bling_Bling]

Everyone was expecting a good result from PPL. When PPL finally announced the result, it was already factored into the share price. With nothing special in their announcement, the market started to take profit and put pressure on the share price.

[marcus_milo]

quote:Originally posted by Bling_Bling

Everyone was expecting a good result from PPL. When PPL finally announced the result, it was already factored into the share price. With nothing special in their announcement, the market started to take profit and put pressure on the share price.


So effectively PPL are slightly overpriced, yes?

[SueJ]

Effectively, it's a well-established pattern on the NZX for good companies that turn in good results to get whacked for a few days. Then the price goes back to its uptrend.

[Bling_Bling]

quote:Originally posted by marcus_milo


quote:Originally posted by Bling_Bling

Everyone was expecting a good result from PPL. When PPL finally announced the result, it was already factored into the share price. With nothing special in their announcement, the market started to take profit and put pressure on the share price.


So effectively PPL are slightly overpriced, yes?


It depends if they can continue on their growth path and generate good returns that meet and/or beat market forecast. If PPL can do this, then the shares are justified at these high PEs. If not, then they will drop like a rock. Your guess is as good as mine.

[Halebop]

At $3.30 PPL is trading at around 22.5 times. Alas PE is an overused and less than useful barometer of "value", other than making a company appear superficially cheap or expensive.

To determine value in PPL's case we are most interested in earnings and cashflows (if we measure by net assets they are far over valued). On DCF with the following assumptions it's easy to work back to a value of $3.30 without getting too demanding...

Discount Rate 10%
Growth Rate 11.6% per annum for 10 years
Termination Growth Rate 0%
Derived Value $3.30.

I've no strong opinion of PPL either way but looking at the PE and calling them expensive is just a case of asking the wrong question. Perception of the retail cycle will probably have as strong an impact as operational performance in any case.

If the question is will you continue to receive an outsized return from here (or in Buffett speak is the company at half or less intrinsic value and will it keep growing?)... then this requires a growth rate on the above assumptions of at least 21.4% per annum.

Disc: Don't hold.

[icehot]

PPL is going back towards all time high - this stock has the same potential as Billabong in Australia. Its market is the world - not just NZ and Australia. The UK is now moving along, the Middle East loves PPL'products and Asia will not be too far off.

PE ratio is but one measure of a stock's potential worth. Sky TV which I also own is an example 2 years back of a stock trading on a forward PE of 100 plus times but it has been a stellar performer. Guess why?

PPL was floated on a PE of 25.8 times at $1.25. It's now $3.38 and is on a forward PER of less than 17 times. Think about that for 1 minute, PER junkies.

[rmbbrave]

A year or two ago Brian Gaynor wrote an article contrasting the styles of WHS and MHI in there overseas expansion. WHS bought a bunch of established stores and rebranded them - and lost a fortune. MHI opened stores 1 at a time.

PPL seems to be following the MHI route.

Drip-feeding spreads Pumpkin Patch
18 September 2005
By GREG NINNESS

When Pumpkin Patch executive chairman Greg Muir announced an 82% lift in operating profit last week, fellow retailers Stephen Tindall and Eric Watson may have paused to reflect on what might have been.


Pumpkin Patch's international success stands in stark contrast to the overseas adventures of Tindall's Warehouse Group in Australia and Watson's Pacific Retail Group's foray into the UK.

The Warehouse has struggled in Australia and may yet quit that country, and Pacific Retail's purchase of ailing UK appliance retailer Powerhouse has been one of the more spectacular wealth-destroying exercises of the past few years. In the year to July 31, Pumpkin Patch earned nearly 57% of its revenue and 78% of its operating profit in Australia and shows no sign of slowing down there.

That helped push the company's operating profit up by 82% (to $37m) compared with the previous year, while net profit surged by 204% to $24.6m.

Just as importantly, its UK operation which is gaining the smallest of toeholds in a market which holds huge potential is already on the verge of turning a profit.

Muir and his team seem to have found the magic formula for extracting maximum gain while enduring little pain whenever they have entered a new market.

The secret, says Muir, is a cautious approach that starts off at a slow pace.

"(Pumpkin Patch managing director) Maurice Prendergast has had a very sensible plan about how we should go offshore," said Muir.

"And that has been to first put our toe in the water and test it everywhere we have gone.

"And then we might try some variations until we think we've got it right. And only then do we speed up.

"It's always been a case of take a small step, evaluate it, take another step, evaluate it, and so on.

"That's how we did it in Australia. We opened one store in the first year and another store in the second year. And when we thought it was right, we sped up."

Just as importantly, the company always leaves itself a back door in case things do not work out as expected.

"We never spend so much that if it doesn't work it would put the company in peril," said Muir.

"We can always turn around and go the other way."

But that did not rule out growing by acquisition if it enabled Pumpkin Patch to get stores in favourable locations fairly quickly.

Pumpkin Patch's other strategy has been to progressively move into bigger markets.

It started in Australia, where it now has 75 stores and plans to open another eight to 10 stores a year for the next three years.

In the UK it opened three stores a year for the first three years, then took a breather in the fourth year and opened none. Now it has 16.

"It was a slow process of testing it, getting it right and trying some variations on them until we were comfortable," said Muir.

"In the UK it took us four years to get into that position. And now we are more comfortable about operating in the UK, we're going to speed up.

"And that's exactly what we've done in the US. We opened one store (in Los Angeles) a few weeks ago, and another three over the next few months. Then we'll watch how they're developing and that will tell us whether there's genuinely a market there for us."

[Bling_Bling]

WHS may have to copy and paste this strategy into their companys strategic plans.

:D:D

Welldone PPL.:)

[winner69]

Interesting that Pumpkin Patch derives so much of its profits from Australia and as expansion continues in GB and US with the inevitable earnings coming through NZ will indeed only be a small part of the business.

Talk about high PEs etc for PPL is irrelevant ... one must look at the future prospects to evaluate what it is worth.

PPL has a strong brand portfolio and is a high margin (as designer/manufacturer and as a retailer) business with undoubted growth prospects for some years to come.

It is also generating huge amounts of economic profit .... like last year $80M odd of capital driving $25M of NPAT and even if cost of capital is 10% some $17M of economic profit.

The NPV of that future economic profit on modest, compared to what they have achieved, revenue growth is significant ... add that the book value of PPL and the current shareprice is 330 odd looks cheap.

[Dazza]

looks like a good time to buy? $3 ..

[winner69]

Dazza ... could well be

At least they make pretty good margins which insulates them a bit if the market does turn down ... and essentially not a NZ retail business

[Dazza]

exactly winner
i c them as the only company on the nzx, with potential growth in the coming years.

starting off with my own n00b analysis:

AIA - love the monolopy .. but sorry bird flu pandemic... plus my holdings im happy with what i have now.

NOG - 2007/08 share for me :P

SKC - waste of time i feel now...

TEL - just mmm thanks but no thanks, im happy with my tiny holdings.

CEN/VCT - enough weighting in there

WHS - RED ALERT STAY AWAY

MHI - fully priced IMO, PPL IMO will &gt; MHI

WAM - i like it, will look to make some pickings for LT i tink

[Dazza]

question for PPL shareholders

does PPL have a DRIP system? and their divi payout ratios?

[rmbbrave]

Pumpkin Patch expects softer retail market

22.11.05 3.05pm


Pumpkin Patch expects to put in a strong trading performance over the full year, despite softer retail environments in its main markets.

Pumpkin Patch chairman Greg Muir today declined to give a half year profit guidance at the company's annual meeting in Auckland, saying the company was only just entering its critical November/December trading period.

But he repeated his expectation that retail trading conditions for the year in its three main markets of New Zealand, Australia and Britain will be less buoyant than a year ago.

"However we believe our store roll-out programme, the brand development strategy we have in place, and the increase in customer awareness for the Pumpkin Patch brand we are seeing in all our markets, will combine to generate another strong trading performance," Mr Muir said.

So far this year Pumpkin Patch has opened 11 stores in four countries and is on track to meet its plan to open 22 new stores by the end of the year.

Among the new openings was Pumpkin Patch's first company-owned retail store in the United States.

"Although we had proven the Pumpkin Patch brand sells well in the US through our wholesale customers, the team spent 12 months testing the viability of stand-alone stores and developing our strategy of entry to this exciting market," Mr Muir said.

In September the children's clothing retailer reported a net profit of $24.6 million for the June year, up from $8.1m in 2004.

Shares in Pumpkin Patch were up 2c at $3.28 this afternoon, having ranged between $2.30 and $3.64 over the past 12 months.

- NZPA

[Nigel]

General feeling is that the increase in PPL stores worldwide should combat any softening in sales to produce another solid result.

[rmbbrave]

Pumpkin for South Africa patch

23.11.05
By Karen Chan


Pumpkin Patch is poised to sign a wholesale deal to supply children's clothes to a partner in South Africa, and is exploring deals in Indonesia, Singapore and Poland.

But the company told shareholders at its annual meeting in Auckland yesterday that new wholesale relationships would not generate noticeable earnings until at least 2007.

Executive chairman Greg Muir said after the meeting that it took three or four years for wholesale deals to deliver. When the wholesale business took off in 2004 and 2005, the small team had to focus on existing clients, not new business.

"We're only just going out this year and talking to new accounts," he said.

South Africa and Asia had great potential, with small-scale trials going on in Indonesia and in Singaporean department store Tang's.

Pumpkin Patch clothes are sold in 11 countries, a figure which could swell to 15 if deals were done in all four of the countries being considered.

Muir told shareholders he would not give guidance on the company's half-year result, given Pumpkin Patch was just entering the crucial Christmas trading period. But he reiterated comments the company made in September, that it expected the overall retail trading environment in New Zealand, Australia and the UK to be less buoyant than a year ago.

Higher interest rates and petrol prices would take their toll. But the company's store roll-out programme, brand development strategy and the increase in customer awareness for the Pumpkin Patch brand should generate another strong trading performance, he said.

"It will be a good year this year but it's not going to be as outstanding as last year."

Analyst consensus forecast is for the company to report a net profit after tax of about $29 million for the year to July 2006. Muir indicated he was comfortable with that, saying the company "hadn't given any negative comment" on the forecast.

Pumpkin Patch is also continuing to expand overseas in its own right, not just through wholesale partners. Managing director Maurice Prendergast said the company had now opened three stores in the US, two in Los Angeles and one in San Francisco, and planned a fourth. "Feedback from customers has been positive," he said.

The company has had a setback in the US with the takeover of Marshall Fields. "We have gone from Marshall Fields, which we want to be in, to Macy's, where we are not so sure," said Prendergast. Pumpkin Patch has opened 11 stores in four countries to date and is on track to meet its plan of opening 22 stores this year.

[rmbbrave]

Feltex not a patch on Pumpkin
07 August 2006

By TERRY HALL
You win some, you lose some. Back in May 2004 investors were offered two choices: Pumpkin Patch and Feltex. Most opted for the carpet maker.


Someone who invested $10,000 in Pumpkin Patch would now have a holding worth $33,500. A $10,000 investment in Feltex is worth about $590.

The Feltex offer was heavily promoted on the basis of a return to the sharemarket of a well-recognised Kiwi company whose problems were behind it and because of its promised high dividend yield.

It wasn't only mum and dad investors who bought shares. The issue was taken up by charitable trusts and similar bodies who thought that, even if it failed to meet its ambitious targets, it offered a secure yield.

Some brokers who promoted Feltex were lukewarm about Pumpkin Patch. When its share price took off after listing, one said dismissively it was due to buying by "women and young mothers", adding: "I suppose they do all the shopping." For many women it was their first solo share buy.

There was little or no interest in the stock from male clients, he said.

The women knew they were on to a good thing. Pumpkin Patch shares were issued at $1.25. The first sale was at $1.31 on June 9, 2004, and they never sold below that. Their record high was $4.51.

Last week they lost 11 cents to $4.19. Their continuing strength has been in spite of at least one big broking firm issuing regular advice to clients to quit the stock at lower price levels, saying it is overpriced.

Pumpkin Patch has been helped by its overseas strategy in faster-growing economies, including Australia, where it makes about 65 per cent of its profits. The foreign exposure promises increasingly good returns if profits continue to trend up in these countries and the Kiwi dollar continues to slide as expected.

The success of its overseas stores suggests that its creative designs are globally acceptable. ABN Amro analyst Carolyn Holmes says she can "see no reason why Pumpkin Patch can't be as internationally successful as Gap, Osh Kosh and Billabong".

ABN Amro says if the company's stores in the United States and Britain perform in line with expectations, Pumpkin Patch shares are worth $5.33 on a discounted cashflow basis. However, it notes neither of these divisions is "currently making any money". Excluding these investments, it values the stock at $3.

In spite of its shares looking expensive in context of the overall New Zealand market, ABN Amro says: "We would prefer to have a holding in this growth stock than not."

http://www.stuff.co.nz/stuff/0,2106,3757195a1865,00.html

[winner69]

quote:Originally posted by rmbbrave

Someone who invested $10,000 in Pumpkin Patch would now have a holding worth $33,500. A $10,000 investment in Feltex is worth about $590.




Still ahead if invested in both eh .... diversification works

[kittydashwood]

w69 is mary holm

[rmbbrave]

quote:Originally posted by KW

For those of you not in Australia, you would not believe the baby boom that is going on over here. People are dropping them like rabbits, of the 3 women on my floor at work, 2 of them are pregnant. Australia's fertility rate is one of the few countries where it is now on increase. Aussies still have no paid maternity leave, but they do get a $4000 payout from the government for each sprog they contribute to the country.


KW,

A sample of 3 is not very large is it?

Certainly not large enough to draw the conclusion that Oz is in the midst of a baby boom.

In 2005 the total fertility rate (or total lifetime births) for Ocker chicks was 1.8.

In NZ and the US it was 2.0 and in the U.K. it was 1.7.

http://www.prb.org/pdf05/05WorldDataSheet_Eng.pdf

[Flying Goat]

quote:Originally posted by KW

For those of you not in Australia, you would not believe the baby boom that is going on over here. People are dropping them like rabbits, of the 3 women on my floor at work, 2 of them are pregnant. Australia's fertility rate is one of the few countries where it is now on increase. Aussies still have no paid maternity leave, but they do get a $4000 payout from the government for each sprog they contribute to the country.


At last someone wants to talk about Pumpkin Patch.. the stock that will prove to be the highest return investment on the NZX by 2013. There you go my stake is in the ground, and will be happy if some one will reply at that time and tell me how right (or wrong) i was... I also read somewhere that there is a strong uptrend in baby making in Australia but cannot find the article anywhere... anyway, with or without the boom this baby will continue to outperform, look for strong results in the USA and Uk around the end of 2008, when store opening costs are less of a feature and the real earnings growth will be uncovered and sky rocket, as we saw in Australia in recent years...
Also noticed that Fisher Funds just topped up another 1% of the co.

FG

[Flying Goat]

quote:Originally posted by Dazza

question for PPL shareholders

does PPL have a DRIP system? and their divi payout ratios?



Dazza

The divi pay out ratio is 50% of npat, as I understand the other 50% retained for opening new stores / working capital to fund growth, hence the strong organic growth we have seen and will continue to see. They also haved their own team of shopp fitters to open new stores, so I am sure that it is a piece of cake ny now and that helps reducing shop fitting costs, although I think the stores in UK / USA are more expensive, larger format etc... but also generate higher revenue...


FG

[bushbasher]

quote:Originally posted by bongo66

Im thinking of getting a long term holding of this one(so get out current holders;)) As i have to find another company to substitute for my absent friend WAM.

Any watchers recommend an entry price. Will it dip below $4 or is it close to lows as it ever will be again?

B
Good question - in my experience this one has always been a bit sticky on the downside. Tends to move up quickly on earnings announcements then hovers around that new level until new news comes along.

Think it would only dip below $4 if next profit announcement not as good as market expecting.

[winner69]

quote:Originally posted by bongo66

Im thinking of getting a long term holding of this one(so get out current holders;)) As i have to find another company to substitute for my absent friend WAM.

Any watchers recommend an entry price. Will it dip below $4 or is it close to lows as it ever will be again?


B




If you are going to hold for the longer term no better time to buy than today

[Yogi]

FY result due 18 Sep 06

[Flying Goat]

quote:Originally posted by bongo66

Im thinking of getting a long term holding of this one(so get out current holders;)) As i have to find another company to substitute for my absent friend WAM.

Any watchers recommend an entry price. Will it dip below $4 or is it close to lows as it ever will be again?


B




hey bongo,

good question but tough to answer, let me share my experience... last announcement (earlier this year) was positive, they seemed to have been doing everything right, UK was starting to gather momentum and early figures from US indicated much greater potetnial than in OZ...

yet for some reason it was sold down quite hard, even below $3.30, that is when I started to load the boat, as at that price the SP had gone nowhere for a year, yet the fundamentals and prospects were looking stronger than ever. I guess people had too high expectations, as well as all the sh1t-for-brains fund managers who take a six month view, and start bandying about words like "soft retail market, avoid".

The truth is that yes, the retail environment in NZ and OZ will be slow, but PPL are strong brand, who can open store after store, in many markets - as well as building strong third party channels in new markets (look to SA and perhaps continental europe in next few years) so regardless of the retail environment this is a long term winner.

PPL has very strong support at the $4 mark but as someone else in this thread said, it does get sticky on the downside and people tend to over react to less than perfect news with these guys due to overly high expections... i too had WAM and was also dissapointed to lose them... but with PPL and RYM are still some good long term holds...

Cheers
FG

[Flying Goat]

Trouble with these smaller volume stocks though is that price movements can change wildly with little volume so the chage can be quite meanlingless.

Thanks for the info.

B
[/quote]

Yep, they are tightly held indeed, as was Waste Management...

[Flying Goat]

quote:Originally posted by winner69


quote:Originally posted by bongo66

Im thinking of getting a long term holding of this one(so get out current holders;)) As i have to find another company to substitute for my absent friend WAM.

Any watchers recommend an entry price. Will it dip below $4 or is it close to lows as it ever will be again?


B




If you are going to hold for the longer term no better time to buy than today




SALE NOW ON AT PUMPKIN PATCH SP REDUCED TO $4 HURRY WHILE STOCKS LAST!

[Ttops]

quote:Originally posted by Flying Goat


quote:Originally posted by winner69


quote:Originally posted by bongo66

Im thinking of getting a long term holding of this one(so get out current holders;)) As i have to find another company to substitute for my absent friend WAM.

Any watchers recommend an entry price. Will it dip below $4 or is it close to lows as it ever will be again?


B




If you are going to hold for the longer term no better time to buy than today




SALE NOW ON AT PUMPKIN PATCH SP REDUCED TO $4 HURRY WHILE STOCKS LAST!

Quick before Carmel ramps the price. ;)
Treetops

[gulf]

More volume last few days.When is the result due ?
Thanks

[KJ]

Must be Fisher Fund buying more-resulr due 18 Sept

[Halebop]

Agree with your rationale KW but some adults will choose to buy their kids' clothes at big box retail like WHS or WALMART if times are tight. Although in NZ perception of Pumpkin Patch is at the upper end of the spectrum they are really middle market rather than top or bottom. To my mind Middle market is more discretionary than the extreme ends.

[Flying Goat]

quote:Originally posted by Halebop

Agree with your rationale KW but some adults will choose to buy their kids' clothes at big box retail like WHS or WALMART if times are tight. Although in NZ perception of Pumpkin Patch is at the upper end of the spectrum they are really middle market rather than top or bottom. To my mind Middle market is more discretionary than the extreme ends.


Not so sure the NZ market is even such an issue for PPL, just need to look at sales in the three US stores during the first six months of operation, within four years US and UK sales will be dwarfing NZ sales... As for Australia, they are already earning the bread and butter over there, earnings up or down 10% in that market over the medium term shouldn't be a big deal in the big picture strategy... still think there wil always be segments in US / UK that will drive sales growth there regardless of the macro environment, to be honest my only conern is how it will be possible to maintain margins when volumes increase there without building a distribution centre in the states, current system of production in China, freight to Auckland, Freight abroad must be starting to cost more with the Fuel / Air Freight charges on the up etc... Another issue is with the possibility of the Chinese govt tightening monetary policy this could impact the production costs as the local currency in China (and therefore related USD transactions) is likely to strenghten and put upward pressure on production costs..
On the other hand one might expect synergies from Northern Hemisphere volumes becoming close to Southern Hemisphere so some seasonal rotation could be possible in the sense that, for example, end of season summer stock in the US / Europe could be shipped down to Aust and NZ and sold at full price (instead of just deeply discounted to clear...) Anyway, all in all looking forward to the results next month not because I think the result will be great (i am forecasting earnings per share of approximately 18 cents) but because no doubt they will give a heads up on the expansion plans from here in the US, i.e. with 10 stores up and running there by mid Sep the big question is where to from here... and how quickly / or cautiously. Likewise keen to see how sales are going at the Bull Ring complex in Birmingham apparently the shopping centre is goliath and brings droves from all over the north of England... thirdly keen to see if and how the NZD currency drop has impacted earnings. Don't know what is going on with the SP at the moment, unusually large volume went through yesterday..

Cheers
FG

[Halebop]

On the plus side in PPL's home market - not very scientific but I was periphary to a conversation between a group of supervisory level managers from the financial services sector bemoaning the number of front line staff on or approaching maternity leave or leaving work altogether due to pregnancy. Although they might just be feeling the acute level of quality staff shortages my hunch says not (or not just that). My one offer was that they were experiencing government pro-family / birth rate policy at the coal face.

[Flying Goat]

quote:Originally posted by KW

Yup, and to add to my anecodote, a fourth pregnant woman has joined the group on my floor, for about a month before going on maternity leave. So thats now 3 out of 4!


Hey,

FYI

Latest post on PPL's US Retail site: www.pumpkinpatchusa.com confirms that the first ten stores are now up and running and another two (that is number eleven and twelve in US) are planned for opening soon in California. Seems US expansion is all guns blazing from here on in..!

FG

[Phaedrus]

You need to decide whether you want to simply "buy and hold" PPL (so long as the long-term trend remains up) OR whether you want to Sell whenever the uptrend weakens, buying back in again when it strengthens again.
This chart attempts to provide for both approaches. More active investors would be following the shorter term signals provided by Trendline breaks, the Stochastic oscillator, OBV and the 12.5% Trailing Stop. The On Balance Volume indicator is supposed to be a "leading" indicator, and that has certainly been the case here, with the OBV trendline breaks being the first signal to trigger every time. Note the "smart money" getting out on 28/3/06. This event was discussed at the time on the 'PPL' thread.
Those that are happy to ride out retracements (that may be over 30%) would be using less active, longer-term indicators such as the 110 day Moving average and the Average True Range based Trailing Stop shown here, selling only when/if price action falls below these.
PPL appears to have found good support at $3.94. A break below this level would obviously be Bearish, and would also breach the 12.5% trailing stop.

http://h1.ripway.com/Phaedrus/PPL92001.gif

[Flying Goat]

quote:Originally posted by Phaedrus

You need to decide whether you want to simply "buy and hold" PPL (so long as the long-term trend remains up) OR whether you want to Sell whenever the uptrend weakens, buying back in again when it strengthens again.
This chart attempts to provide for both approaches. More active investors would be following the shorter term signals provided by Trendline breaks, the Stochastic oscillator, OBV and the 12.5% Trailing Stop. The On Balance Volume indicator is supposed to be a "leading" indicator, and that has certainly been the case here, with the OBV trendline breaks being the first signal to trigger every time. Note the "smart money" getting out on 28/3/06. This event was discussed at the time on the 'PPL' thread.
Those that are happy to ride out retracements (that may be over 30%) would be using less active, longer-term indicators such as the 110 day Moving average and the Average True Range based Trailing Stop shown here, selling only when/if price action falls below these.
PPL appears to have found good support at $3.94. A break below this level would obviously be Bearish, and would also breach the 12.5% trailing stop.

http://h1.ripway.com/Phaedrus/PPL92001.gif




Nice one, thanks for that Phaedrus! I will be watching out for breach of the 12.5% trailing stop... my strategy with PPL is a "buy and hold" more for tax reasons than anything else, and because of my confidence in their potential to become a leading global rag-brand in their own niche al'a Billabong

Based on yr analysis, I guess that if SP falls below 3.94 it might be smarter to exit, pay the tax on gains above my ave cost price and buy back cheaper, with view to long term again


FG

[limegreen]

FG, sometimes technical weakness is paralled or caused by signs of fundamental weakness. For example, an earnings downgrade triggering a breach in support might be a valid reason to sell without an intent to sell for profit. Although, you might also wish to consult a tax expert on that!!

[Yogi]

Were all shareholders sent a copy of PPL's mail-order catalogue?
Or just me because I bought a gift voucher?

[Flying Goat]

quote:Originally posted by Yogi

Were all shareholders sent a copy of PPL's mail-order catalogue?
Or just me because I bought a gift voucher?


Not sure about that Yogi, but latest results had a bit of a surprise in them... the result would have been pretty much in line with my expectations were it not for the hefty chunk of EBIT that was gobbled up by this pesky new trade tariff introduced in the US and EU, and significantly higher tax rates in their UK and/or US markets, must admit I did not factor those in... never the less the organic growth path and global brand building mission is still looking good for the longer term and with store opening costs understating the earnings pictures, imo, the future looks bright for the patient...

Article:

Pumpkin Patch profit up 16pc

MONDAY , 18 SEPTEMBER 2006


Children's clothing retailer Pumpkin Patch has reported a net profit after tax of $28.5 million for the year to July, up 15.9 per cent on the same period a year earlier.

Managing director Maurice Prendergast said sales growth was seen across all segments, with especially strong growth coming from the British retail market.

Sales by the group, which includes Urban Angel stores, were also up in Australia and New Zealand, despite the state of the retail environment in those countries.

Operating revenue rose 11.1 per cent to $311.5m, with 31 stores opening during the year - 14 in Australia, seven in Britain, six in the United States, and four in New Zealand - taking total store numbers to 168.

A final dividend of 4.25c per share, fully imputed, would be paid, taking the total dividend for the year to 8.50cps.

Mr Prendergast said that during the year the company faced historically high export foreign exchange rates, especially against the Australian and US dollars.

That had the effect of understating the true sales growth in overseas markets, he said.

Also during the year quotas were re-imposed on Chinese manufactured clothing imported into the US and the European Union from January 2006.

That reduced earnings before interest and tax (EBIT) by about $3.4m in the seven months since it was imposed.

The fickle nature of the Australian and New Zealand markets continued to provide uncertainty in the near term, Mr Prendergast said.

With increased interest rates and petrol prices denting customer confidence, the company anticipated a challenging 12 months in those markets.

But the Pumpkin Patch brand continued to dominate the childrenswear sector in Australasia, and the company would continue its policy of store growth and margin retention.

As store numbers increased in the developing British and US markets, strong sales growth was expected, but store opening costs would initially impact on the overall financial result.

The directors and management were confident the strategy would in the long term deliver the best result for shareholders.

The company would also continue to identify new wholesale markets for the coming years, predominantly in Asia and Europe.

In today's report Pumpkin Patch reported that sales from Australian retail stores rose 4.4 per cent to $A147.6m , or in NZ dollar terms sales were up 3.8 per cent to $163.5m.

Australian retail EBIT was up 12 per cent to $32.5m.

The 14 stores opened in 2006, including three outlet stores, took the total number of stores in Australia to 89, with 11 new stores planned in the coming year.

In New Zealand, retail sales grew 3.2 per cent to $59.7m, with EBIT growth of 11.8 per cent to $11.8m.

Total New Zealand stores had risen to 49 at the end of the year. One more store had opened since then, and the company expected to open another three Pumpkin Patch and one outlet store in this country in 2007.

In Britain turnover was up 51.2 per cent to Stg15.1m ($NZ43.3m), with EBIT of $1.8m, compared to an EBIT loss in 20

[The BOWMAN]

This has to be the MOST OVERVALUED share on NZX. Check back in a year's time.

[rmbbrave]

In 2005 Australia's TFR was 1.8, well under the 2.1 needed for the population to grow OVER THE LONG TERM.

http://www.prb.org/pdf06/06WorldDataSheet.pdf

No one in their right mind would describe a country with a TFR of 1.8 as being in the midst of a baby boom.

Clearly Ockers are not giving Costello what he wants - they are having one for Mum, and 80% are having one for Dad but no one is having one for the treasurer.

[Halebop]

quote:Originally posted by KW

Confirmation of Australia's baby boom (for all the naysayers!):

The Age, 22 September
"Based on preliminary figures, total births across the country in 2005 are estimated at 265,031, up more than 15,000 from the year before.

Federal Treasurer Peter Costello — who in May 2004 encouraged Australian couples to "have one for mum, one for dad and one for the country" as a response to the ageing population — said the estimate was the highest since 1971."

And as I mentioned, I think there are more people having babies this year than last year!

Find a chart somewhere that displays age brackets of the population in Australia or New Zealand and it should be apparent why you are seeing a rise in births. New Zealand in particular enjoyed a mini Baby Boom (I'm not sure 10 years really counts as a Baby Boom, More of a Baby Blip) that peaked to rival the original from (1986 to 1996 vs 1946 to 1964). Those oldest er... "Boomer Spawn Boomers" are now 20 and their growth in numbers will peak in about 10 years time. With supportive government policy it should be a slam dunk to convince the institutionalized offspring of the boomers (and Gen X'ers) to breed.

...'course then we have to pay for 20 years of education and health care before they become productive and pay for aging Boomers at the same time. Without good management the economic malaise could put the 70s to shame.

Suspect that we have commenced a new Baby growing cycle in NZ recently so will be interested to see data when it becomes available.

[Flying Goat]

quote:Originally posted by The BOWMAN

This has to be the MOST OVERVALUED share on NZX. Check back in a year's time.


Bowman

You clearly have a limited understanding of what PPL are achieving abroad, and that their net profit figures are currently largely understated due to store opening costs that are helping them towards repeating the exponential growth phenonemom in the UK/US that we have already seen in Australia only two years ago (how quickly you forget).

Watch this forum in three years, and again in five years and we will see who is laughing. PPL is a transparnet business that does not talk up its prospects, rather it delivers results year after year, and the high multiple on which its trading is a testament to the fact that investors are aware of their growth trajectory. When the nz economy is in go slow over the next few years, the kiwi dollar back to its lows and PPL continues rapid global growth and brand recognition, there are not many fund managers who will want to tell their investors that they DON'T HAVE PPL in their portfolio.

I am holding PPL on a pe of around 18, but would not trade it for anything else on the nzx, but my ambitions are five year, minimum. Based on your comments i assume you are a short-termer, so i would admit that over 12 months something like Skellerup does represent much better value. However I must say that i think there are more expensive shares than PPL all things considered: Delegats, Auckland Airport, to name a few.

FG

[rmbbrave]

quote:Originally posted by KW

1.8 is higher than many other western countries, where it is as low as 1.2

But more to the point, 4 years of increasing numbers of babies and small children bodes well for a seller of childrens wear. So from PPL's perspective, its boom times.


PPL doesn't have stores in "many Western countries".

"Pumpkin Patch predominantly sells through its own store network in New Zealand, Australia, the United Kingdom and the United States."
http://www.pumpkinpatch.biz/ourCompany.html

In New Zealand, Australia, the United Kingdom and the United States, the TFR are 2.0, 1.8, 1.8, 2.0.

None of these countries have TFRs above the long term replacement level of 2.1.

Give up KW,

You're flogging a dead horse trying to find a baby boom in the Western world.

[Snow Leopard]

"A cynic is a man who knows the price of everything but the value of nothing." Oscar Wilde

[rmbbrave]

When a man wants to murder a tiger, it's called sport; when the tiger wants to murder him it's called ferocity.
George Bernard Shaw

[Halebop]

The replacement rate has little to do with the math of growth in this instance. Through a combination of Government Policy and Demographics the number of births has been on the rise. This makes for a growing market segment for PPL. In addition, the mini baby boom (children of Baby Boomers) that began in most of these countires in the mid 80s will themselves soon begin having families (the front end of this typically smaller boom have turned or are approaching 20), which is partly why governments in many countries are incentivising procreation, not because replacing Boomers is required (which it is), but that incentivising replacing boomers is affordable and practical before the boomers stop paying net tax.

[djones]

"Pumpkin Patch Ltd. (PPL NZ), a New Zealand children's clothing retailer, fell 8 cents, or 1.9 percent, to NZ$4.10 after an investor sold 4 million shares, or 2.4 percent of the company, at NZ$4.10."

[KJ]

djones-are you sure?Appears to be up 2cents today.

[djones]

That was last month, just interesting an investor would sell such a large holding at $4.15.

[Halebop]

quote:Originally posted by djones

That was last month, just interesting an investor would sell such a large holding at $4.15.

I guess interesting that investor's also bought such a large holding? A good number of those share went to a single investor.

[Flying Goat]

quote:Originally posted by Halebop


quote:Originally posted by djones

That was last month, just interesting an investor would sell such a large holding at $4.15.

I guess interesting that investor's also bought such a large holding? A good number of those share went to a single investor.


Exactly, for every seller there is a buyer. Buyers tend not to spend that amount of $$ before doing their homework though... so that little piece of news is neither here nor there really. People sell, people buy.

FG

[rmbbrave]

Pumpkin Patch pay dirt
01 October 2006

By TERRY HALL
Pumpkin Patch helps explain why investors stick with the share market, in spite of the occasional nasty shock such as Feltex.


Both were floated in May 2004. Anyone who invested $10,000 in Pumpkin Patch would have more than tripled their money. Those who put $10,000 into Feltex have lost the lot.

Some brokers actively encouraged clients to invest in Feltex, rather than Pumpkin Patch, arguing it was less risky and promised a much higher income stream given its forecasts of substantial dividends. Most brokers were at best lukewarm about Pumpkin Patch, regarding the retailer as a riskier investment that seemed to be expanding too quickly here and overseas.

Men avoided Pumpkin Patch, but, thanks to women, who knew its products first hand, the float was a success. The shares cost $1.25. The first sale was at $1.31 on June 9, 2004, and it never sold below that. Pumpkin Patch has continued to perform well, in spite of fairly regular reports by analysts that clients should sell, or take profits by reducing their holding.

It has also managed to consistently outrun the market by producing better-than-expected results. The run of good news continued in the latest result for the year to July 31, when tax-paid profits rose 15.9% to $28.5 million, while group operating revenue was up 11.1% to $311.5m.

Like most other retailers the group said it is encountering difficult trading conditions in Australia and New Zealand. New Zealand sales were up 3.2% to $59.7m, and in Australia 3.8% to $163.5m.

The key success, however, has been in what UBS analyst Stephen Freundlich said was a "most impressive expansion" of profit margins given the trading conditions. "Strong cost control disciplines will pay dividends when the retail environment improves," he said, adding that the margin improvement was being helped by the group spreading its overheads over a greater number of stores. In New Zealand the group improved margins by 1.6 percentage points to 19.8% helped by higher pricing in stores, and in Australia they rose 1.5 points to 19.9%.

In Australia the group opened 14 new stores last year, bringing the total to 89, with another 11 due to be opened this year. In New Zealand there are 49 stores, including 14 in the Urban Angel chain.

The most successful recent expansion has been in Britain and the United States, where the company has been effectively testing the market to judge the acceptability of its brand and products. This phase has now ended with chairman Greg Muir saying expansion in the northern hemisphere "was now beyond an experiment".

In Britain the group opened seven new stores in the past year, bringing the total to 23. Carolyn Holmes, of ABN Amro, expects an additional eight to be opened there each year. Sales in the UK rose by 51% to 15.1m, and profits were NZ$1.8m, much better than the forecast $1m.

UBS says that while the results from the UK are encouraging, "the US remains the best option value". Freundlich believes the American stores must be "going gangbusters" based on the management's decision to open a further 12 stores there this year. Short to medium term earnings will be bogged down by an initial heavy corporate overhead structure and capital opening on new stores, he said, though these pressures will abate.

The American stores made a loss of $400,000 in the past year, including a quota charge being imposed on the imported goods from China. ABN Amro forecast losses in the US will rise before coming into a profit of $1.2m in 2009.

ABN Amro rates Pumpkin Patch a hold with a target price of $4.25.

UBS is much more positive, rating it a buy, with a target price of $5.05.

First NZ Capital retains what it terms a conservative view regarding the ultimate penetration in the UK and US. It rates it an underperform with a 12-month target of $3.35.

[Flying Goat]

Good old First NZ Capital are not too keen on PPL are they, oh well, presumably the same insightful analysts that recommended investors go with the Feltex IPO (that they were partly underwriting) and avoid the Pumpkin Patch IPO saying that PPL was too risky[:I] Thanks all the same First NZ, but I would rather blindfold a monkey and have him throw darts at a board than rely on your analysts[8D]

FG

[Footsie]

hmm i rate the research from ABN quite highly and have acted on a number of calls this year both in NZ and ASx with a high success rate

i'd say 4.25 is a fair view.

although noting ABN did have a sell on PPL about a year ago which i felt was a mistake.

its growth thats the key, which is why BGR peeled back from its lofty heights.

[Placebo]

You can quote analysts all you like but the opinions that really matter are those of the mums who keep on going back to shop at Pumpkin Patch.

I happen to be married to one :( and the house is filling up with product. Mrs Placebo rates the Pumpkin Patch new seasons range on a par with US-based Oshkosh, which is usually a lot more expensive (but has become cheaper thru Farmers). Mrs P reckons the quality of PP gear is streets ahead of Just Kids, another privately-owned kids retailer based in Wellington.

And you guys miss the point about population growth. You don't need to grow the population to grow the market, the kids do that for you. Retailing kidswear isn't like retailing adult clothing, which you might fit for 3-4 years (or more, if yr like me ;)). Kids need new clothes every 3-6 months, so it is very high volume turnover.

If their expansion in the UK and Aust is thru PP-own stores on the same format as here they will continue to be on a winner. Never mind the fundamentals, the mums love it and keep going back and that's what counts

[ratkin]

On trade me kids clothing is th number one searched for item and the category with the highest sales.

Many sensible parents dont bother buying new as they kno the kids going to outgrow clothes in a few months anyway

[kittydashwood]

I was lining the pumpkin up for a small exploratory buy but have held off after seeing how badly targeted their shops are in the US.
Have they seriously researched the US demographic, what works in OZ and NZ and to a lesser extent Europe doesn't always translate well to the U of A

[Flying Goat]

quote:Originally posted by kittydashwood

I was lining the pumpkin up for a small exploratory buy but have held off after seeing how badly targeted their shops are in the US.
Have they seriously researched the US demographic, what works in OZ and NZ and to a lesser extent Europe doesn't always translate well to the U of A


Am intrigued on your logic behind "how badly targeted shops are in the US" - have you been over there recently? My calculations, based on FY06 results, at store level they are on target to turn over significantly more in their first year of operation that of most of the long established NZ and AU stores. In answer to your question, yes they have seriously researched the US demographic, otherwise they would not be borrowing 13 million to expedite the US rollout. American consumers shop like nobody else on the planet, you don't need to have a large market share to do get a decent slice by NZ standards.

By the way, what would you suggest with regards changing their formula for the US dempgraphic... ditch the immaculate store layout and twin pram width aisles? Lose the fresh colours and regular new styles for something a bit more Gap-Clone like perhaps..??

FG

[mothership]

I am a complete novice on the share market front - here to learn only. But I do bleed money on making sure my children aren't naked in public. Actually if I left them naked I would have money for shares... but I digress. I can only admire the Patches marketing here in NZ - they have the image, pricing, availability, quality etc etc spot on. Someone up the food chain in management clearly knows their stuff. I can'tcomment on how they will do in the US, but they haven't gone far wrong to date as far as I can see ... except they haven't come up with industrial strength knee pads for boys jeans.

[kittydashwood]

I have been through several of their stores stateside recently.
Store layout isn't the problem, usually close to Nordstroms in Mall arrangements helps align it with the higher earning but it's the clothes and colour range and advertising are aimed at white liberal kids. This might work in Ohio but won't cut it in california

The big markets with kids on the west coast seemed to be Hispanic and Asian.

PPL is on my watchlist but it looks like expensive growth and i don't trust the liquidity with kingfish holding. eventually being an investment company they sell to realise profit.

[Placebo]

Thanx Kitty I was going to ask u to expand on yr comments.

Well I guess they have identified their market segment? And it would be big enough? California is such an enigma isn't it? Heaps of immigrants (legal and non) plus the showbiz and media types yet they vote in a Republican governor (okay, so he's a movie star).

Sounds like they are after the Soccer Moms :D

[Flying Goat]

quote:Originally posted by KW

Kids dont buy clothes, their mothers do. I guess they are after women with money, which in the US is mostly white liberals and not illegal immigrants so I guess their targeting is dead on.


Exactly, see stats below on California as per 2004 census, target market appears suficient in size:

Population, 2005 36,132,147

White persons, 77.20%
Black persons, 6.80%
American Native persons, 1.20%
Asian persons, 12.10%
Hawaiian or Pacific, 0.40%
Two or more races, 2.40%

Persons under 5 years old, 7.30%
Persons under 18 years old, 26.70%
Persons 65 years old and over, 10.70%
Female persons, 50.10%

Ref: http://quickfacts.census.gov/qfd/states/06000.html


KittyDW,

Don't mean to labour the point, but as KW points out if they were to target ethnic minorities in California, they would have to change their product mix to baby head-nets, baggy jeans and medallions... imo the current approach of sticking to the knitting will see results over the long term.

Cheers
FG

[djones]

Higher than average median household income in 2003 at $48,440US which is good. Not sure about living costs there but id say that means more disposable income to spend on new childrens clothes.

[kittydashwood]

interesting stats flying goat, i imagine 77% white are actually 50% hispanic. the middle class are getting squezzed in the us no matter what their race. I used to hold Nordstorm and JC Penny but sold both into the recent rally because I'm worried about margins shrinking as consumers tighten up.
Demographically speaking if you are entering the US market thinking it's white, get real the face of the united states is changing.

I will buy pumpkin patch when they address the badly focussed stateside advertising.

Study: Hispanics dominate California birth rate - Los Angeles -
Jan 17, 2002
LOS ANGELES

In another sign that Hispanics will dominate California's future, a university study has found the ethnic group accounted for nearly half of all births in the state by the end of the last decade. Hispanic mothers had 247,796 of the 521,265 children born in California in 1998, or 47.5 percent, according to the University of California, Los Angeles study released last month.

Non-Hispanic Whites had 33.9 percent, followed by Asians and Pacific Islanders with 10.7 percent. Blacks represented 6.8 percent of births and American Indians a half-percent of all births.

California's future economic health depends upon those Hispanics, who soon will be the majority of young adults and hence the working force, says David Hayes-Bautista, director of the Center for the Study of Latino Health and Culture at UCLA.

"We can see the future population of California looking into the delivery rooms of today," he says. "We have a very few years to make some choices," such as improving education.
Advertisement

The study, based on state health department statistics, confirms the ethnic shift that made 2001 the year California officially lost its White majority. The U.S. Census showed that Hispanics made up nearly a third while non-Hispanic Whites slipped to less than half of the state's total population of 33.9 million.

California's experience is part of a "sea change" in the United States, where 23 states already have Hispanics as their largest ethnic minority, says Dr. Harry Pachon, president of the Tomas Rivera Policy Institute, a think-tank on Latino issues based in Claremont, Calif.

Hispanics are becoming more prominent in everything from movies to politics, and that is good for the state, Pachon says.

"If there was no penetration of social and political institutions, then you would have an isolated minority and that's a recipe for social unrest," he says.

On the other hand, by the third generation one of every two Hispanics have married outside of their ethnic group, he noted.

"There's a Latinization of America but there's also an Americanization of Latinos," he says. "By third generation, a lot of them are losing their Spanish, they prefer American NFL to soccer."

Overall, nearly 65 percent of all Hispanic mothers were immigrants, ranking them second to Asian and Pacific Islanders at more than 84 percent.

The babies tend to grow up healthy as well. Studies have shown that at virtually all stages of life, Hispanics, at least in California, Arizona and Texas, tended to suffer fewer major health problems, such as heart attacks, cancer and strokes, than other ethnic groups, Hayes-Bautista noted.

Only about 15 percent of Hispanic mothers were 19 years old or younger. By comparison nearly 17 percent of Blacks and 19 percent of American Indians were teen-agers. Non-Hispanic Whites had a figure of nearly 7 percent.

COPYRIGHT 2002 Cox, Matthews & Associates
COPYRIGHT 2002 Gale Group

[Placebo]

The changing ethnic mix is an issue here too. Pakeha NZ has lower birth rate than Maori/Pacific, and predictions are that within 20-30 years NZ will be about 50% brown (currently 25%).

My view is that with rising educational achievements among Maori/PI and therefore incomes they will follow mainstream trend of reducing birthrates. And they will probably shop at middle class white shops too.

Why do poor people have more babies?

[Flying Goat]

Hey KittyDW

Thanks for posting that article, it is interesting and you have a good point. Also agree that right now PPL is not a good time to buy, probably over priced, however (at least in my opinion) is one of the higher quality companies on the nzx, with growth prospects that could lead it into the top 15 by market cap within a few years... etc. I guess my point with regards to US, and with all their markets for that matter is that while everyone is debating birth rates, ethnicities etc... PPL are embarking on GEOGRAPHIC EXPANSION and therefore even if the NZ, AU, US and UK economies were all slowing, and birth rates declining PPL would STILL GROW because they are popping up in another mall in another town where there are enough middle class schmucks like me and you to make every store highly profitable, once established...

Hope there is a dip in price soon, so newcomers can get on board too! [:p]

[patsy]

quote:Originally posted by Placebo


Why do poor people have more babies?


Two reasons:

1) Education (or, more precisely, lack of)
2) Because they tend to follow the cultural (unconscious) trend of "the more the children they have, the more likely is they will have a larger support base in later years of their lives"

[winner69]

Interesting observation H9 - actually PPL is rising faster than BGR did

Plotting PPL and BGR on a weekly basis from IPO date (ie weeks listed) is pretty scary if you are a PPL shareholder - the lines are tracking each other to date .... but will PPL keep it up

From the chart -

** Both ended ist week after IPO at about 140

** After 20 weeks BGR was 210 and PPL 211

** After 27 weeks (last Fri and the time PPL has been listed) BGR had only increased to 227 while PPL has gone to 257

** BGR got to 275 in week 40 before drifting a bit and got back to 280 in weeks 54 and 55 ... and we know what has happened since as the high expectations were not met

This was a post way back in 2004

PPL surely did keep it up longer than BGR ..... did better than BGR in that it went to nearly $5 (BGR only $2.80) ........... but heck PPL is almost back to the IPO price .... just like BGR did

Will PPL do a BGR when it retreated and go down to something like $1 .... before it makes some sort of comeback

You never know in these sort of markets ... esp for companies that disappoint

[COLIN]

This was a post way back in 2004

PPL surely did keep it up longer than BGR ..... did better than BGR in that it went to nearly $5 (BGR only $2.80) ........... but heck PPL is almost back to the IPO price .... just like BGR did

Will PPL do a BGR when it retreated and go down to something like $1 .... before it makes some sort of comeback

You never know in these sort of markets ... esp for companies that disappoint

And now, to create some intrigue, Rod Duke emerges as an 8.3% holder of PPL. Sort that one out!

[Dr_Who]

And now, to create some intrigue, Rod Duke emerges as an 8.3% holder of PPL. Sort that one out!

Very interesting. Abit like PPG. No one seems to know what the hell is going on, but yet these guys are taking a strategic holding and the sp continues to drift downwards.

[COLIN]

I see that Rod Duke is still buying - has increased his interest from 8.4% to 9.4%.

[COLIN]

In Belfast currently and the new PP store seems to have few customers and is offering hefty discounts on many items. Nice looking store, though. Plus I've never seen as many prams as I have here, so there's at least one thing auspicious.

Thats Belfast Christchurch, I take it? Or have they expanded to Northern Ireland already?

[COLIN]

I see that Rod Duke is still buying - has increased his interest from 8.4% to 9.4%.

Now Jan Cameron has entered the fray, accumulating over 6%.
"Rod & Jan" - not to be confused with "Rodd and Gunn".

[Dr_Who]

It is funny how the mums and dads are paying up for PPL cos JC and Duke has got a few percent in the stock.