The Bubs Australia Ltd (ASX: BUB) share price is falling on more disappointing sales data from China and amid a move that could see four board members canned.
Bubs founder and former CEO Kristy Carr is leading a group of shareholders calling for the dismissal of directors Katrina Rathie, Steven Lin, Paul Jensen, and Reg Weine. They’ll be put on the chopping block at a shareholder vote, to be held within two months.
It’s been a little under a month since Carr was sacked due to “failure to comply with reasonable board directions”.
Bubs also dropped a trading update this morning, revealing more disappointing news about its sales in China. Its revenue in the nation is expected to crash as much as 75% this financial year.
Right now, the Bubs share price is down 2.70%, trading at 18 cents, its intraday and new 52-week low.
Let’s dive deeper into all that’s going on with the infant formula producer today.
Bubs board to go to shareholder vote
There’s been plenty of drama in the Bubs camp this week, with Carr revealing a campaign dubbed ‘Save our Bubs’.
Today, the company announced it received a request to call a general meeting from shareholders boasting a combined interest of around 5%.
It must call the meeting within 21 days of receiving the request and hold it within two months.
The meeting could see shareholders voting to remove the four directors and appoint three put forward by the campaign.
Commenting in a video on the campaign’s website, Carr said:
I have seen [the four] board members operate, and as a key shareholder, I have grave concerns about the future of the company in their hands.
It is no wonder that they have sacked or lost so many of the key talent that make the company great, including the executive chair, the CFO, and three key China team executives.
This great business needs an experienced team to deliver value for all shareholders … [and] we didn’t just put together a good team, we have the absolute dream team.
The campaign proposes former A2 Milk Company Ltd (ASX: A2M) CEO Peter Nathan be appointed to the board. If elected, Nathan will take the reins as CEO and managing director.
Former Elders Ltd (ASX: ELD) deputy chair James Jackson has been named to take on the role of chair.
Industry veteran Rupert Soar has also been proposed to join the board alongside two yet-to-be-recruited female directors.
Bubs kicked off a strategic review of the business after several governance changes in April. That’s expected to be completed by 30 June.
Bubs share price slumps on trading update
In other news, the Bubs share price is sinking as the company reveals its China sales haven’t improved since the end of the third quarter.
Sales of Bubs Supreme – developed to be distributed in the nation – continued to follow the second half’s trend over April and May. Meanwhile, sales in Bubs’ China cross-border e-commerce and online to off-line channels remain below expectations. The company said today:
Bubs is working hard to improve the distribution and sell through in China.
Bubs expects its full-year China net revenue to come in between $13.5 million and $13.8 million. That’s down from $53.6 million in the financial year 2022.
However, the company is on track to meet all regulatory milestones for access to the US$5.6 billion infant formula market.
It’s expecting to bring in between $20 million and $22 million of net revenue from the nation this financial year – up from $8.1 million last fiscal year.
Finally, Bubs’ growth in Australia has continued. It forecasts to post between $14.5 million and $14.9 million of net revenue from Australia in the financial year 2023 – up from $12.9 million.
