Blackmores delivers record sales but share price plummets
Written on the 19 February 2019 by Business News Australia
Record sales have generated record revenue of $319 million for health supplement company Blackmores (ASX: BKL) but CEO Richard Henfrey has told shareholders to not get too comfortable.
Shares in Blackmores are down nearly 30 per cent at 10.42am AEDT after the company said growth in China has softened.
"Achieving record sales is a very significant result for our business and highlights the benefits of our continued investment in advertising and promotion in recent months," says Henfrey.
"However, due to this planned investment in the period and a softening of growth in China, there has been a short-term impact on profit growth."
The company's reported China segment sales were down 11 per cent in 1H19, and the company expects growth in sales to Chinese customers to be around 8 per cent.
Blackmores says other Australian retailers are more directly targeting the China export trade which contributed to the softening of segment sales.
Investments in the region by Blackmores continue to grow however and the company has recently appointed Shawn Dou, a Chinese Canadian actor, as a brand ambassador in China.
Sofia Tseng has also recently been appointed as country manager for China who will lead a review of Blackmore's investment in the country.
Across the rest of Asia Blackmores recorded strong levels of sales. Korea increased 67 per cent, Taiwan increased 150 per cent, and Hong Kong was up 39 per cent.
Back home, revenue was up $23 million to $144 million driven by strong domestic growth and increased sales.
"Our brand health measures show strong results from our increased marketing investment," says Henfrey.
"We are the most recognised brand name in the market and have had strong year-on-year increases in penetration and brand trial-and-purchase."
"In a market that is seeing new entrants and strong competitive activity, we are pleased with this performance."
Embracing an online store has also paid off for Blackmores who achieved record online sales in November as consumers flocked to online Black Friday sales.
The company does not expect its second half to be as strong as this first half because of the softening sales in China. All other markets are expected to continue performing well for the rest of the year according to Blackmores.
Business News Australia
Author: Business News Australia