Bubs Australia’s China sales slumped again in the fourth quarter amid the infant-formula maker’s efforts to fix its “failed” strategy in that Asian market.
Fresh from winning a board-seat battle with former executives, the publicly-listed business eked out growth in the US and Australia in the three months to 30 June, but China was a drag on its performance.
Weeks after pledging to “reset” the China strategy, Bubs Australia reported a 96% decline in fourth-quarter revenue in the country to A$1.4m ($941m) from a year earlier. Sales were also down 55% from the prior three months when revenue also dropped.
China is a key market for Bubs Australia alongside the US. In June, the company revealed a A$20-25m non-cash impairment charge linked to inventory of unsold A2 Supreme formula in China, where it plans to apply for SAMR registration for its goat powder formula under the Caprilac and Bub’s namesake brands.
For the full year, Bubs Australia reported revenue in China of A$13.6m, well below the A$53.6m generated in the previous 12 months.
“We are now starting to see some modest growth and sell-through in CBEC for Caprilac and the Bubs sales volumes have stabilised,” the company said in a stock-exchange filing today (31 July), making reference to the China cross-border e-commerce trade channel.
“With new trade partners and distributors on board, we expect to see our China sales and volumes build steadily in the coming year.”
Fourth-quarter group revenue was down 59% at A$20m from the corresponding period a year earlier but was up 27% from the prior quarter. For the year, sales climbed 29% to A$73.7m.
In the US, Bubs Australia posted revenue of A$11.8m for the quarter, up 45% from a year earlier and 97% from the prior three months. Sales advanced 95% for the year to A$23.8m.
Sales in Australia increased 7% from the year-earlier period but fell 3% compared to the third quarter. Annual sales rose 19% to A$15.2m.
Bubs Australia added operating expenses for the group increased 110% in the fourth quarter from a year earlier. Those expenses have been described as a “cash burn”, which the company previously said it plans to reduce to around A$2m a month from A$5m a month.
