Ann: First Half Trading Update, page-40

Hi, new to Pental but have been watching for a while. Some general observations (apologies if these are repeated thoughts).

Woolies and Coles are both pushing to be the price leader, a big part of this is pushing through Private Label where ever they can but they have this counter balance to them that they need to maintain branded products to keep their top line sales in line with market expectations. i.e. to much private label will destroy the top line growth = analyst downgrades


The "Trading terms, promotional rebates and discounts" line says alot, rebates are generally fixed (slide up and down with revenue). The line value hasn't moved (with declining revenue) which means they are pumping cash into promotional activity. Something that worries me. NPD is great but the marketing expense is down for the period. This leads me to believe the business is focused on the short term and unlikely has a good strategy to get out of where they are.

Price is not the only lever these guys need to pull, there better be some serious push to get their products in prime locations, real NPD that is going to deliver and get their overheads under control otherwise this one is going to be a victim of supermarket wars.


No debt is a good place to be but It wont last long. If some story comes out about a little debt to launch new products Im going to get very nervous.