Shares of Lark Distilling Co [ASX:LRK] are down by 15.69% this morning — trading at $1.37 per share — after the Tasmanian distillery company released an update to its quarterly sales forecast that hinted at tough times ahead for the company.
Shares of Lark have been down by 51.7% in the past year. This comes as the company struggled to recover from the controversy of former CEO Geoff Bainbridge, who stood down in February of last year amidst an alleged drug extortion video that surfaced.
Since then, a slowing global economy has added to the headwinds for the burgeoning Whiskey maker, with shares down by 18.69% this week as investors are wary of continued falling sales.
Source: TradingView
Bad weather ahead for 2H23 forecast
Today, Lark Distilling provided an update on their quarterly sales and cost expectations for the rest of the year — reflecting falling consumer confidence and a tough trading environment for the Tasmanian Distillery.
Lark forecasts a decrease in net sales for the second half of 2023 (2H23) compared to the first half (1H23), projecting $7.4 million for 2H23 and $9.6 million for 1H23.
As a result, their full-year estimate for FY23 stands at $17 million, with 4QFY23 sales projected at $3.9 million due to the cycling of certain one-off sales and a challenging business environment.
The report also announced an additional $1.4 million in one-off costs related to restructuring and obsolete goods — bringing the total non-recurring costs of FY23 to $2.3 million.
Lark CEO Satya Sharma tried to remain upbeat on today’s announcement, remarking:
‘Our focus remains on setting up Lark to deliver sustainable long-term success, one that creates and enhances shareholder value. The actions we have announced today are necessary to deliver long-term growth, the future of the business and our brands.’
So, what is the long-term growth and future looking like for the whiskey company?
Lark tries to shake off bad news (again)
It’s been a tough start for Lark’s new CEO, Satya Sharma, who took over from interim head Laura McBain in May this year.
Ms McBain held the interim role since controversy struck the company. Former Managing Director and serial Entrepreneur Geoff Bainbridge stood down after he was allegedly extorted for a video in which he is seen smoking methamphetamine.
Since Bainbridge’s exit in February 2022, Lark has seen shares fall by 70% as the company failed to shake the controversy and capture international interest.
The company reports that approximately 80% of its market remains in Australia. This is a problem if Lark wants to find growth that will change the negative headlines that seem to follow the company.
Adding to their woes are tough economic headwinds showing consumer confidence down in Australia and people cutting back on luxury items, which has retailers feeling the pain.
On Monday, Mr Sharma underpinned that the tougher economic conditions and costs would not affect the core strategy, while a strategic review was underway that will be expected in September.
‘These decisions do not impact our focus to continue to craft and lay down the right inventory to build our domestic and export potential for Lark.’
Capturing an international market will be key for the future of Lark, which holds hopes of breaking into the lucrative Asian market that has a burgeoning love affair with all things whiskey.
Source: Global Market Insights
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Regards,
Kiryll Prakapenka
For Money Morning
