The Blackmores Limited (ASX: BKL) share price has been amongst the worst performers this morning.
In early trade the health supplements company's shares have fallen 5.5% to $129.53.
What happened?
This morning Blackmores provided the market with its first-quarter update.
According to the release, net sales increased 9% on the prior corresponding period to $134 million. A key driver of this growth was demand from China. Sales into China increased 28% during the quarter.
Thanks largely to the implementation of a global approach to pricing, the company's bottom line grew at a much faster pace than its top line. For the first-quarter of FY 2018 net profit after tax grew a solid 28% to $15.4 million.
Management has once again resisted giving any real guidance for the year ahead and has instead stated its belief that Blackmores is "on track to deliver growth on last year's reported profit".
I suspect that this cautious guidance is what has caused its shares to tumble lower today. After all, with its shares up almost 43% in just three months, they are trading on a lofty multiple and have a lot of future growth priced into them.
Due to its guidance, some investors may be concerned that management isn't confident that it can maintain this level of growth for the entirety of the year.
But I suspect the company will. I think management is right to be cautious, especially given the unpredictable buying habits of Chinese daigou and tourists. But overall the company is in a far better position now than it was a year ago and I expect a solid full-year result in FY 2018.
In light of this, I would suggest investors keep an eye out for any share price weakness over the coming days or weeks and use it as a buying opportunity.
