Ugly Downgrade For Beauty Stock BWX

By Glenn Dyer | More Articles by Glenn Dyer

Another confession from a one-time growth darling yesterday that left shareholders considerably poorer on the day.

Shares in BWX plunged more than 30% at one stage when the company sprang a surprise earnings downgrade for 2018-19 and re-organisation on the market.

Shareholders learned the company has cut its earnings guidance by nearly 20%.

BWX said it now expects trading earnings before interest, tax, depreciation, and amortisation to be in the range of $21 million to $23 million.

That is sharply down on February’s guidance when the company said it expected underlying earnings before interest, tax, depreciation and amortisation to be in the range of $27 million to $29 million.

The shares fell to a low of $1.35, down 32% on the day. They closed 15% lower at $1.70.

BWX said it expected Sukin skin care business’ trading to be impacted in the fourth quarter as the company cycled unprofitable promotions and unnecessary stock building.

Looking into 2019-20 BWX is expecting improved margins and a reduction in trade investment as promotional activity and stock is managed (cut) to appropriate levels.

The company announced David Fenlon, a current nonexecutive director of BWX, had been appointed Global CEO and Managing Director effective from 1 July 2019.

BWX Chairman, Ian Campbell, said in yesterday’s statement: “The Board acknowledges the significant effort that is required to build capability within the business and implement the systems and processes that are required to support a business of BWX’s size.”

“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,” Mr. Campbell said.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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