Beauty products group BWX (ASX: BWX) has collapsed and entered voluntary administration, bringing an end to a tumultuous 12 months for shareholders and employees. The board of directors has appointed Kate Warwick, Joe Hansell, and Kelly Trenfield of FTI Consulting as administrators, effective immediately. The move follows the Commonwealth Bank’s refusal to extend the terms of its loan, leaving BWX with no way to make up for its losses.
In the first half of FY23, BWX recorded statutory revenue of $79.7 million, falling over 18.6%, and a 600% EBITDA loss of $29.7 million and profit loss of over 1,000%. Its losses after tax amounted to over $100 million, a significant fall from about $5 million in H1 FY22. Elevated inventories, reduced marketing, and overall poor management led to the company’s collapse.
Over the past months, to combat that, the Company undertook board renewals and voluntary suspension from ASX in a bid to get its financials together. Last year, BWX’s accounting blunder came to light when it indefinitely pushed its full-year FY22 results due to problems with revenue recognition. What’s more? It tried to use its fudged numbers to raise capital. Red flags all around.
It didn’t take long for things to go south, as its brands—Sukin, Go-To and more—suffered terribly. A wave of resignations and divestments followed, and the Company has been on a selling spree, still coming up short. According to their Half Year report, the Company still had $55 million worth of inventory on hand as of 31 December 2022 which will undergo a fire sale by administrators.
Now, as a result, its subsidiary brand, Go-To, founded by Aussie author and entrepreneur Zoe Foster Blake, has gone up for sale, too. The Directors have been actively working to find a compatible buyer for BWX’s 50.1% shareholding in Go-To. Go-To is managed independently of BWX and has its own treasury function, separate cash flow management, and an independent team across all departments of the business. It does not use any BWX manufacturing or development capabilities and proudly supports its retail partners via its sales and retailer management team out of Sydney.
The board of directors believes that entering voluntary administration will help progress the restructuring process already underway with new management at BWX and give the Company the best chance of future profitability. The directors noted that they will work with the administrators to ensure a positive outcome in the administration, with employees and customers remaining a top priority.
The administrators intend to continue the sale process for Go-To, and the board of directors is considering how to best protect the interests of the company and the group as a whole in the absence of an agreed refinancing. No avenues are in the pipeline.
Obviously, shareholders are not pleased as they rebuke BWX’s management for not knowing better.
Alinda is a Business Reporter for The Sentiment
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