Just a month after Bubs Australia (ASX: BUB) announced that executive chairman Dennis Lin would be removed from the business, the baby milk formula company announced another shake up of its executive line up. Perhaps a foreseeable one, this time founder and CEO Kristy Carr was terminated from her position with immediate effect due to “failure to comply with reasonable Board directions”.
The announcement also confirmed Lin’s termination of employment effective immediately (instead of resignation with a planned handover period as previously speculated). Non-executive director Katrina Rathie was named Bubs’ new chairman effective 6 April, while Reg Weine had been appointed as an independent non-executive director. For the time being, Chief Operating Officer (COO) Richard Paine will act as interim CEO until a permanent CEO is confirmed.
Commenting on Carr’s exit, Bubs new chair Rathie commented, “We acknowledge Kristy’s long service to Bubs and the role she has played in building the Bubs brand to the position it enjoys today.”
“The Board thanks Richard Paine for his continued strong performance as Bubs’ interim CEO. In support of Richard and the Bubs executive team, the Board will lean in to contribute its strong commercial, FMCG, dairy and international markets expertise to drive Bubs’ strategy forward in Australia, USA, China, and international markets”
Leading up to her ousting, Carr took a four-week personal leave from the company she founded soon after long time business partner Lin stepped down, reportedly as an expression of discontentment. According to the AFR, Bubs staff, numbering more than 80, were told about Carr’s leave via email and a Zoom call. The news came from the Chief Operating Officer (COO) Richard Paine, who was running the business in her absence.
The crack among the board of directors first began due the pressure mounted on Lin (who has been on the board since Bubs listed via IPO in 2017), over the Company’s poor H1 FY23 financial performance. For the half, Bubs reported a $44.4 million loss, which included a $20 million impairment on its subsidiary Deloraine Dairy, and sales in China down 48 per cent. Bubs’ sales growth in Australia and the USA was offset by a sharp downturn in China sales amidst very challenging market conditions and channel disruption.
Carr herself aired her support for Lin by taking the matter to LinkedIn, saying that since Bubs listed in January 2017 he was a “true leader, has masterminded and led every acquisition, merger, strategic partnership, capital raising and corporate development, as well as Bubs route-to-market and growth strategies in China and the USA”.
“From receiving the coveted ‘Australian Exporter of the Year’ award at Parliament House, to the Great Wall, to the White House, Dennis made the impossible possible!”
The post also mentioned that Carr “100% stand[s] by him.”
Not only affecting the direct parties, the board’s treatment of Lin and Carr had caused mixed reactions among stakeholders. Bubs co-founder Anthony Gualdi in particular, has voiced dissatisfaction over the forced exit of the two executives.
“I do not support what has happened. Kristy and Dennis – in particular Kristy has dedicated 18 years of her life – since we founded the company”, Gualdi commented. “The process and the way in which it was done is wrong.”
Meanwhile, Bubs’ largest institutional investor C2 Capital Partners led by director Steven Lin, backed Rathie’s appointment as the new chair, as did Paul Jenson who joined the board in March. C2 Capital is the largest shareholder, with a 10.15%stake, backed by Alibaba and invests in companies capitalising on a growing middle class in China.
On 28 April 2023, Bubs announced plans to conduct a strategic review of the global business with a particular focus on expenditure management and the Chinese market. The review is on track to be completed by 30 June 2023.
Clara is a Business Reporter for The Sentiment.
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