Baby formula company Bubs Australia (ASX: BUB) has all but closed the chapter on its financial and legal troubles that underlined most of last year.
In the USA, its weekly scan revenue exceeded $1.5 million per week, with over 24,000 tins sold. The number of tins sold increased by 10k to about 24k compared to May last year. In May 2024, it was the number one best-selling infant formula product on Amazon USA, up from its sixth position in February 2024.
Bubs continued progress on its FDA permanent access pathway and clinical trial, with over 300 infant enrolments or 75% of its target enrolled as of 7 June 2024. FDA approval is expected prior to October 2025. It has also commenced the roll-out of new label tins and sizes for the USA market.
Bubs Chief Executive Officer and Managing Director, Reg Weine, commented, “We are continuing to see exceptionally strong demand for our products in the USA, and we have now reached a new weekly scan sales record in the USA with revenue exceeding US$1m.”
He added, “Our recent brand performance is a testament to our premium, high quality, clean label nutritional options that continue to resonate with US parents and healthcare professionals. We have recently increased our target inventory levels in the US to meet the rise in demand and following the stock shortages which occurred in late 2023 and believe this strong and sustained consumer driven demand will provide a strong tailwind for growth in FY25.”
Besides the US delivering strong growth, Bubs’s China business has also been rebounding. The Company’s new goat infant formula is now ‘live’ on T-Mall and JD.com and available on the O2O (online-to-offline) channel. Bubs’s focus on the O2O channel is already paying dividends, with 143 new outlets stocking Bubs during April and May.
Importantly, the ‘overhang’ of Bubs Supreme inventory in the Chinese market, which created several challenges and was held by the Company’s former distributor, is now behind the Company as it enters FY25 with “‘clean air’ and strong momentum”, noted Weine.
Last year, a bitter boardroom spat left Bubs to undertake serious damage control following a disappointing year financially and fruitless attempts at chasing debts created by previous management. As a result, it ousted Dennis Lin (the former Executive Chairman) and Kristy Carr (the Founder and former CEO), who were collectively responsible for the Bubs China strategy and managed the relationship with the Alpha Group – the Company’s distributor in China.
In Q3 FY24, Bubs’s YTD revenue stood at $51.3 million. The Company reported that it’s on track to exceed the FY24 group gross revenue forecast of $100 million with an underlying gross margin of 40%. The USA now represents 53% of the Company’s gross revenue. China’s gross revenue of $2.3m was down 28.1% on PCP, and Australia’s gross revenue of $5.6m was down 5.1% on PCP.
Bubs remains confident it will be cash flow positive and trading EBIT positive in FY25
Weine commented, “We are confident that we have now built the ‘go-to-market’ and brand foundations for sustainable growth in FY25 and beyond and now have a clear pathway to positive trading EBIT next year.”
Alinda is a Business Reporter for The Sentiment
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1 Comment
Shraddha13
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