After losing a series of company directors, its CEO, and founder Kristy Carr and Chairman Dennis Lin, baby formula makers Bubs Australia [ASX:BUB] has reflected on trade for Q3.
Bubs shares were falling by nearly 3% by lunchtime on Friday — worth 18 cents a share.
Year-to-date the baby milk distributors have dropped 40% in share value and 70% in the past 12 months:
www.tradingview.com
Bubs trading update comes amid disgruntled shareholder-ship
Today, BUB released a short summary of its trading metrics over the last few months, reporting that its Q3 gross revenue had moved down by 56% as a fair portion of its finished goods inventory remained held in trade.
Total net revenue had churned $2.9 million in Q3, and FY23 second-half revenue was also down by 52% with $12.9 million.
Sales in April and May were noted to have missed expectations. The group has forecast full-year net revenue from China to be in the range of $13.5 million–$13.8 million versus $53.6 million in FY22.
In the US, Q3 revenue hit $4.6 million while the FY23 second-half year-to-date net revenue was $17.6 million.
Despite the slowdown to the cause of ‘Operation Fly Formula’, the group still predicts an increase in net revenue for the full financial year — which has been raised from $8.1 million last year — to a guidance range of $20.0 million–$22.0 million.
Bubs ex-factory sales to retail stockists in the US are expected to build, even after the slowdown in Q2, as retailers sold through the initial ‘Operation Fly Formula’ pipe-fill.
In Australia, Bubs reported Q3 net revenue of $4.26 million — up by 41% — with Bubs Infant Formula scan sales growing at nearly seven times the market growth rate.
For the second half to date, Australia’s net revenue was $12.7 million — up by 27% on the same time last year.
The group is forecasting full-year Australia net revenue to hit $14.5 million–$14.9 million versus $12.9 million in FY22.
Other international revenue had gone up by 67%, with $922,000 in net revenue in Q3, and the group expects an increase in net revenue for the full year to reach $4.5 million–$5.0 million.
This latest trading update came as former chief executive Kristy Carr has made headlines. A group of concerned investors wish to launch a board overhaul in the aftermath of the company’s ousting of Carr, ex-chairman Dennis Lin, and a handful of other group directors in recent weeks.
A group of Carr-loyalists have adopted the tagline ‘Save Our Bubs’ and shown concerns over social media regarding the group’s mishandling of strategies in changing markets in China, and ultimately angered over the termination of the founder’s leadership.
Bubs argues it has the support of the group’s largest shareholder, C2 Capital, and said it is working hard to improve its distribution methods and sell-through of the company’s products in China.
It will be interesting to see what comes of this investor outcry and the company’s next steps for managing the business in the coming weeks.
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Regards,
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For Money Morning
