BWX Limited, a beauty supply company, has had its stock throttled by more than 40 per cent on Thursday, after downgrading its profit forecasts for the 2019 financial year.
The company, which owns brands such as Sukin, Renew Skincare, Uspa and Andalou, announced that weaker trading had led it to downgrade its before-tax earnings forecast to between $27 and $32 million.
That would be $10 million lower than last year’s $40.3 million result.
The first half of the year BWX said it anticipates to make $7 million in earnings, meaning it will have plenty of ground to make up in the second.
The company, which sports the slogan ‘built on strong foundations’, looked shakey as the news sparked a huge sell-off on Thursday, seeing the stock price fall to $1.70 during the trading session.
The largest stakeholder in BWX, Bennelong Australian Equity Partners, told Trading Day that the company had a number of issues that culminated in the downgrade.
“There’s weakness in the US with a number of their acquired brands and export sales across to the US, but they have also had an enterprise-wide IT implementation [program] that has been troubling and at the same time they have had the distraction of a management buyout bid which hasn’t made easy sailing for the business,” investment director Julian Beaumont explained.
However, long-term Beaumont said Bennelong still believes in the business.
“The reality is this is a reasonably strong brand. It’s selling very well through Australian doors and to that extent, there is good profit growth going forward.”
Watch Beaumont’s full commentary above.