Problems in the patch
Pumpkin Patch shares hit another record low yesterday as investors continued to punish the company after a dark annual meeting in Auckland on Tuesday.
The children's clothing retailer warned shareholders it could breach banking covenants if trading over Christmas and the New Year is below expectations.
Its shares closed down 4c at 21c last night, giving the business a market capitalisation of $35.5 million.
More than $170 million in shareholder value has been erased over the past two years as Pumpkin Patch failed to gain traction in a difficult retail market beset with margin-sapping discounting and subdued consumer sentiment.
The decline in the share price this week - the stock was trading at 34c before Tuesday's meeting - suggests some investors have little confidence in the two-year turnaround push being spearheaded by chief executive Di Humphries, who took over last year.
Why not buy?
Pumpkin Patch's board and senior management got a grilling from shareholders at Tuesday's meeting.
One asked why directors weren't taking advantage of the low share price and buying up stock.
It's a good question. If the directors have full confidence in the turnaround strategy, wouldn't they be viewing the share price as a steal?
In response, chairman Peter Schuyt said it wouldn't be appropriate for the board members to explain their intentions on shareholdings during the meeting.
"I'd be happy for you to ask, if you want to, after the meeting, individual directors as to their intent on shareholding," he said.
Schuyt, who joined the retailer's board in 2012 and took over as chairman last month, replacing Jane Freeman, told Stock Takes he generally doesn't buy shares in companies of which he is a director.
He doesn't hold any Pumpkin Patch stock.
"My personal theory is to remain completely independent," he said.
Schuyt also said Pumpkin Patch had three new directors, Luke Bunt, Bruce Cotterill and Josette Prince.
"There are three people who have only just got their feet under the table, so it's a bit unfair to suggest that at this point they should be buying up shares at a low price," he said. "Each individual director has their own financial position. They may or may not be in a financial position to invest in the company."
Blase over a billion
"The market cap's hit a billion." Those were the words of an Orion Health staffer, spoken to founder and chief executive Ian McCrae about 45 minutes after the company's sharemarket debut on Wednesday.
"Really?" he replied, without even a hint of excitement. "How do you know that?"
The healthcare software developer's newly listed stock rose more than 15 per cent after trading started, eventually closing that day at a 10 per cent premium to the $5.70 issue price at $6.27 - pushing its market capitalisation over $1 billion.
All things considered, McCrae was blase in his response to the staff member. He has a 50.4 per cent shareholding in Orion, so his paper wealth rose by $72 million to roughly $530 million in less than an hour.
What he does admit to being excited about is the more than $100 million war chest Orion has after the initial public offering.
The company, founded in 1993, is gearing up to double the size of its research and development team to about 700 staff over the next couple of years as it makes a push into international markets such as the United States and Britain.
"In the past, all of our R&D has been hand-to-mouth," he told Stock Takes. "Now we can invest ahead of our revenues, and we need to do that because the whole market is going to change."
Orion shares closed down 30c at $5.97 last night, giving a market capitalisation of $958.5 million.
