The BWX Ltd (ASX: BWX) share price could be in danger today after it downgraded its profit expectations again.
BWX is a wholesale distributor and owner of skincare and other wellness products for the beauty sector. It’s best-known for its range of Sukin skincare products, but it also owns Andalou Naturals, Mineral Fusion and Edward Beale. Its products are sold throughout Australia and USA, and the range is available online throughout Asia.
Why The Negativity About BWX?
The natural beauty business released an announcement entitled “Leadership, Trading & Governance Update”. Trading updates at this time of the year are normally confessions about poor trading.
BWX revealed that its “trading” EBITDA is now expected to be in the range of $21 million to $23 million (click here to learn what EBITDA means). This compares to the previous guidance released in the half year report of $27 million to $29 million. The guidance before that was $27 million to $32 million for FY19.
BWX said that Sukin trading will be impacted in this quarter as it “cycles unprofitable promotions and unnecessary stock building”.
The company also announced that current Non Executive Director Mr David Fenlon has been appointed the new CEO and Managing Director from 1 July 2019. Current CEO Myles Anceschi will be leaving the business.
BWX also said that it’s going to go through a global restructure to “scale the business for growth and take advantage of growth of the natural [beauty] category”.
Mr Rory Gration, who joined the company as Managing Director of Asia Pacific will report to Mr Fenlon and will focus on APAC.
The founders of Andalou Naturals, Stacey and Mark Egide, are in discussions about leaving the BWX business and are helping search for a new President for BWX Brands.
BWX Chairman Mr Ian Campbell said:
“The leadership changes announced today are intended to increase capability and focus. The Board is keen to see the BWX strategy and the company’s key transformation initiatives implemented with greater urgency to ensure the business can continue to scale from a stable base.”
Time To Buy BWX Shares?
I’m not surprised that BWX shares are down another 20% in response to this negative news. Losing another CEO, a profit downgrade and more restructuring after a period of transition is not good.
It may be able to turn things around, but I wouldn’t want to consider investing until I could see it had turned a corner.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.