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- Bubs Australia (BUB) reports Bubs China is anticipating lower-than-expected revenue for FY23
- Bubs China is projected to fall at the lower end of the $13.5 to $13.8 million target revenue, a decrease from the $53.6 million revenue in FY22
- The lower figures are being blamed on distribution through Hong Kong Stock Exchange-listed Alpha Professional subsidiaries, AZ Global and Willis Trading
- As a result, Bubs faces a debt of $5.65 million and holds a significant amount of bulk raw material purchased to fulfil the supply obligations under the contract
- Shares dropped 2.78 per cent to 17.5 cents at 12:59 pm AEST.
Bubs Australia (BUB) has revealed that Bubs China is anticipating lower-than-expected revenue for FY23.
Bubs China is projected to fall at the lower end of the $13.5 to $13.8 million target revenue, a decrease from the $53.6 million revenue in FY22.
The revenue loss is attributed to lower-than-anticipated distribution through Hong Kong Stock Exchange-listed Alpha Professional subsidiaries, AZ Global and Willis Trading.
Bubs Australia expressed disappointment in these subsidiaries, as they had developed Bubs Supreme specifically for distribution by Alpha in China.
Current trade estimates suggest that multiple warehouses are holding more than five years’ worth of Bubs Supreme products.
Bubs Australia had relied on an exclusive partnership with AZ and Willis, which the company reports has not met expectations and failed to deliver the agreed volumes of Bubs Supreme under the contract.
As a result of these setbacks, Bubs is now facing a debt of $5.65 million and has a significant amount of bulk raw material that was purchased to fulfil the supply obligations under the contract.
“Our brand is highly regarded in this critical market, and we need to proceed with a multi-channel strategy supported by professional and experienced trade partners on the ground who can provide us with real-time, valuable market insights,” Bubs acting CEO Richard Paine said.
Bubs announced that exclusivity arrangements with Willis ended this week and the company aims to embark on a refreshed strategic direction in China.
Bubs dropped 2.78 per cent to 17.5 cents at 12:59 pm AEST.
