The skin and haircare group saw shares plummet 40% yesterday after being forced to raise capital to keep operations afloat. Just 8 weeks after their most recent downgrade, BWX cut revenue expectations a further 13%, and EBITDA by another ~60% to just $12-16m for FY22. How did management get it so wrong, or did conditions deteriorate that fast for the Sukin owner?
They’ve blamed retailers for holding less inventory than expected into the end of the financial year, probably because the stock isn’t selling as expected. Its been one disaster after another for BWX with poor integration of underperforming acquisitions, a struggling online approach and cost-out strategies that seem to be adding to costs. The saviour in this period was meant to be the first full-year contribution from a landmark deal with Chemist Warehouse, but even that hasn’t helped all that much.
They launched a capital raise to pay down some debt and keep the lights on at their facility in Clayton, Victoria. $23m is to be raised at 60cps, nearly 50% below where they closed last week. To convince investors to take up their rights they’ve issued guidance for FY23 which is so bullish it further highlights how little grasp they have on their performance at the moment. CBA have opted to give them until the end of the year to get their house in order, I suspect they’ll need a borderline miracle to be on track by then.
