The Blackmores Limited (ASX: BKL) share price has taken investors on a wild ride over the past month with the stock among the market's worst-performing shares during that time.
In fact, the BKL share price has plunged a whopping 18.4%. Blackmores' shares are now fetching slightly more than $90, down from more than $110 a month ago and more than $220 in January 2016.
What's happened?
Between 2014 and 2016, Blackmores was one of the market's favourite stocks. The enthusiasm for companies selling their products into China was sky-high, and Blackmores was producing the goods: revenue and earnings were both rocketing higher, and a timely announcement that Blackmores would also be entering the much-hyped infant formula market only added fuel to the fire.
Unfortunately, the venture into the infant formula market didn't get away as planned with Blackmores unable to share the same kind of success enjoyed by the likes of a2 Milk Company Ltd (Australia) (ASX: A2M), or Bellamy's Australia Ltd (ASX: BAL) (at least in the early days).
Similarly, growth began to slow as retailers cut down on their orders and fears of regulatory risk in China outweighed the excitement of selling into the country. The BKL share price has been stuck in a downwards spiral ever since.
What next?
Blackmores recently noted that it had achieved group sales of $496 million for the first nine months of financial year 2017, marking a 6.7% decline compared to the prior corresponding period. In Australia, sales were down 26% — impacted by the changed patterns of Chinese buyers – although that was at least partially offset by a 60% increase in China in-country and export sales (to $92 million). Net profit was also 42.8% lower.
The company also said:
"The Board expects the full year profit will represent good growth on the 2015 financial year, recognising that 2016 was an exceptional performance that we will not match. We remain confident in the Group's strategic focus and growth prospects."
That said, the company did recently announce a move into the medical cannabis sector, which could create a new avenue for growth over the coming years.
Foolish Takeaway
Blackmores has disappointed investors recently, and it's understandable why the BKL share price has paid the price. But at $90 a share, Blackmores could at least be worthy of a closer look – just don't expect growth like that experienced in 2016 to be a regular occurrence!
