The Bubs Australia Ltd (ASX: BUB) share price has come under pressure on Friday following the release of its first quarter update.
At the time of writing, the infant formula and baby food products company's shares are down over 2% to 69.5 cents.
How did Bubs perform in the first quarter?
Bubs has had a difficult start to the new financial year and reported a sizeable decline in revenue during the first quarter.
For the three months ended 30 September, Bubs delivered gross revenue of $9.4 million. This was down 34% from $14.21 million in the prior corresponding period. Management blamed the decline on a COVID-led contraction in the daigou channel, which impacted sales of its Adult Goat Milk Powder products.
Nevertheless, Bubs Infant Formula sales across all channels grew 9% on the prior corresponding period. A key driver of this was sales into Australian major grocery and pharmacy retailers, which were up 29% over the same period last year.
Total China direct export gross sales rose 25% to $2.6 million, representing 27% of group quarterly revenue. Whereas sales to international markets outside of China came to just $758,000 for the quarter. This was down 33% from $1.14 million a year earlier. It represents 8% of quarterly sales.
This ultimately led to Bubs posting an operating cash outflow of $10.146 million, which was greater than its revenue for the quarter. But thanks to the $32.1 million it raised from investors at 80 cents per share in September, Bubs finished the period with cash reserves of $42.6 million.
What else did Bubs say?
The company revealed that it has launched its Vita Bubs products into 400 Chemist Warehouse stores in October. This is a new range of eight Children's Vitamin and Mineral Supplements.
Management advised that opening B2B orders have exceeded expectations.
Executive Chairman, Dennis Lin, commented: "As planned, the Vita Bubs range of children's vitamin and mineral supplements launched on-shelf in Chemist Warehouse stores nationally in October. We are now onto our subsequent production runs to fulfil anticipated export orders across China, Vietnam, Malaysia and Hong Kong. This is a truly exciting development and demonstrates our ability to launch into adjacent high margin categories that leverage our brand and core competencies in new consumer nutritional needs and consumption occasions."
No guidance has been given for the first half or full year.
