A streamlined portfolio, new leadership, and layoffs—Aussie health, wellness and beauty products brand McPherson’s (ASX: MCP), the brand behind Manicare, Lady Jayne and Fusion Health, has begun damage control after its FY23 financials painted a worrying picture for shareholders.

The Company’s new strategy will focus on its higher margin and higher growth categories where McPherson’s already has a competitive advantage. It will re-invest in its core brands and consider portfolio expansion opportunities. This revamp follows the appointment of new CEO Brett Charlton.

Charlton said, “Since I started as the CEO of McPherson’s in August 2023, the Board and leadership team have undertaken a thorough review of the Company’s strategy to focus on increasing profitable growth and improving returns for shareholders. 

“Our new strategy is to focus on our strongest core brands. These brands will be supported by a portfolio of other attractive brands that will enhance our relationship with retailers and our customer proposition while driving our profitability and scale.” 

He added, “We are exiting non-strategic agency relationships, in addition to undertaking a strategic review of the Multix brand.”  

In FY23, McPherson’s achieved a “below expectations” result that prompted this review. It saw a $2.7 million (23%) decline on FY22 in its underlying earnings before interest and tax (EBIT) to $9.1 million. While its revenue remained largely flat, seeing a decline of 2%, McPherson’s suffered a loss of over $5 million against a profit of $333k in FY22. 

Its Domestic Skincare sales declined by 10%, primarily due to a 36% decline in its hair and skin care brand A’kin’s sales impacted by range rationalisation and inventory rundown before the brand’s re-launch in FY24. Plus, after seeing an 11% decline in its bags, wraps and foils brand, Multix, the Company has brought KPMG on board to undertake a strategic review of the brand. 

Ultimately, the Company ended the year with about $7 million cash in hand against FY22’s $13.1 million. 

Going forward, McPherson’s will focus on five of its key brands: Manicare, Lady Jayne, Dr LeWinns, Swisspers and Fusion Health. These brands have been the most successful for McPherson’s. Besides its core brands, McPherson’s will continue to support A’kin, Maseur footcare, Wagner vitamins and supplements, Bondi Fragrance, Foster Grant eyecare, INC sports nutrition, Oriental Botanicals, and Happy Flora gut health support. 

These brands are expected to provide incremental profit and scale through pharmacy and e-commerce channels. Finally, McPherson’s will cease private label offerings and exit non-strategic agency brand relationships. 

To deliver on its strategy, McPherson’s will reshape its operating model to a functionally based model (where the emphasis is on expertise and not just operations). As part of this, McPherson’s will continue to focus on execution in the Australian/New Zealand and international markets separately. 

As it transitions to the new business model, McPherson’s will eliminate approximately 40 positions, i.e. 12% of its workforce, before 2023 ends. This is part of its cost-saving initiative to reinvest in its core brands and other revenue-driving activities. 

Charlton noted, “Decisions like this are never easy, and we thank all those involved for their contribution to McPherson’s.”