Its a bad announcement hence the share price fall today on top of recently weak pricing. Would it be wrong to find some positives within the announcement?
The bottom end of the indicated guidance was still a profit (+$3m)
They noted sales are ahead of last year
Its implied that some of the profitability hit is increased expenditure on a significant advertising campaign
They are on-track with the two key initiatives noted (a significant marketing campaign and consolidation of wool spinning
The letter indicates that the directors recognize that the profit guidance given is not acceptable
So not totally bad - there is hope
Surely new product ranges /,marketing campaigns is just part of daybto day business for the likes of Cavalier. Don't do that you die.
All I know is that while sales might be on the 'up' they are not gaining market share, here and in Australia. Not good if the market goes against them in future years.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
Shares probably about fair value now (EPS 5.8 cps x 10), can't use a higher PE because clearly this is a cyclical stock... assuming you believe that this really is the final round of restructuring and management with their talk of supporting future years growth are not stringing people along, spinning them a yarn, being a little Cavalier with the truth or stitching them up. Whichever viewpoint one now takes yesterday's announcement was quite a yarn.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
Originally Posted by Joshuatree
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