The market may be finishing the week on a high, but the same cannot be said for the Blackmores Limited (ASX: BKL) share price.
In afternoon trade the health supplements company's shares are down 1% to $72.27. This means the company's shares have now lost over 42% of their value since the start of the year.
Why has the Blackmores share price been crushed in 2019?
Investors have been hitting the sell button ever since the company released its half year results back in February.
Due largely to weakness in the key China market, Blackmores fell well short of the market's expectations for both its half year result and its full year guidance.
Unfortunately, its performance in China has continued to deteriorate since then, leading to the company's full year results also disappointing the market.
In FY 2019 sales in the China segment (key export accounts and in-country sales) were down 15% to $122 million due partly to changes in e-commerce laws. Whereas segment EBIT dropped by a massive 40% due to increased investments in its brand and the expansion of its in-country capabilities.
This ultimately led to Blackmores reporting a 1% increase in full year revenue to $610 million and a 24% decline in full year net profit after tax to $53 million.
It gets worse. Management has warned that trading conditions in China are expected to remain weak during the first half of the new financial year. As a result, it expects its first half result to be down on the first half of FY 2019.
Should you buy the dip?
With earnings per share coming in at 309.2 cents in FY 2019, Blackmores' shares are currently changing hands at 23x trailing earnings.
Whilst this is starting to look a lot more attractive than it was a few months ago, I do have concerns that the China issues could drag its earnings per share even lower in FY 2020. This could potentially make Blackmores a value trap today.
In light of this, I would suggest investors wait for its half year results before considering an investment.
