Here’s why the BWX share price is crashing 22% to a multi-year low today

BWX shares are crashing on Thursday…

| More on:
Man open mouthed looking shocked while holding betting slip

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • BWX shares have crashed to a multi-year low on Thursday
  • Investors have been selling the company's shares after its guidance disappointed 
  • BWX was expecting strong revenue and earnings growth in FY 2022 but this won't be the case now

The BWX Ltd (ASX: BWX) share price has come under pressure on Thursday.

In morning trade, the personal care products company’s shares are down 22% to a multi-year low of $1.45.

Why is the BWX share price being hammered?

Investors have been selling down the BWX share price today after the company’s FY 2022 guidance fell well-short of the market’s expectations.

When BWX released its half-results in February, it told the market it expected to deliver strong underlying revenue and EBITDA growth in FY 2022. However, it expected this growth to be weighted to the second half.

While this is always a bit of a red flag, the market appeared confident BWX would deliver on its guidance and was forecasting strong full year earnings and revenue growth.

However, as you might have guessed from the BWX share price performance today, the company’s second half has not gone to plan.

What did BWX say?

BWX advised that it expects FY 2022 underlying revenue to be in the range of $240 million to $250 million for FY 2022. This will be up 24% to 29% year on year, driven by positive performance from Sukin and Mineral Fusion but impacted by the underperformance of its digital businesses.

As for earnings, the strong growth that was promised in FY 2022 is non-existent after its earnings went backwards in the second half.

BWX now expects to report underlying EBITDA in the range of $34 million to $37 million. This represents a decline of 1.5% to growth of 7% on FY 2021’s EBITDA of $34.5 million.

Management advised that this reflects the impacts of a higher operating cost base, and recent acquisition investments not yet meeting growth expectations. In addition, the company notes that freight and supply chain costs are substantially higher than the prior corresponding period due to COVID impacts.

Refreshingly, the company isn’t hiding from its underperformance like many companies do. For example, it has provided the market with analyst consensus estimates to compare its performance against.

It notes that analysts were expecting revenue of $261 million (up 34%) and ETBIDA of $45.1 million (up 31%). As a comparison, the top end of BWX’s guidance range is revenue of $250 million and EBITDA of $37 million.

Management commentary

BWX’s new CEO, Rory Gration, was disappointed with the half. He also revealed plans to reduce the company’s cost base to a more sustainable level. Mr Gration said:

“BWX’s instore revenue performance has accelerated from 1H22 and the business is supported by strong brands and an ability to scale distribution in key markets and sales channels. Initiatives for reducing our cost base are a key priority, supported by improved visibility and cost controls to ensure sustainable revenue growth.

“With less distractions across the business, the team is focused on streamlining and simplifying our operating model to ensure BWX can continue to grow in a sustainable and profitable way – we look forward to sharing more details at our upcoming Investor Day.”

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BWX Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retail Shares

Sad shopper sitting down with five shopping bags.
Retail Shares

What impacted ASX 200 retail shares this week?

With consumer confidence down substantially, one top broker has cut its share price targets for several ASX retail shares.

Read more »

Happy couple doing online shopping.
Retail Shares

Why is the Temple and Webster share price surging 11% higher today?

The ASX retail share has strengthened this week, but there's a long way to go.

Read more »

Woman looking at prices for televisions in electronics store
Retail Shares

How do you value the JB Hi-Fi share price in June?

What are JB Hi-Fi shares worth today?

Read more »

A woman scratches her head, is this a no-brainer?
Retail Shares

Why is the Premier Investments share price falling today?

Why are shares in the fashion retail investor falling today when the ASX 200 is up?

Read more »

A woman and two children leap up and over a sofa.
Retail Shares

Why did the Adairs share price surge 5% today?

The home furnishing company's stock has broken its two-week losing streak.

Read more »

A woman wearing a top of gold coins and large gold hoop earrings and a heavy gold bracelet stands amid a shower of gold coins with her mouth open wide and an excited look on her face.
Retail Shares

Could be ‘one of the biggest success stories’: Top broker tips 87% upside for Lovisa shares

Could this jewellery retailer be in for better days ahead?

Read more »

surging asx ecommerce share price represented by woman jumping off sofa in excitement
Retail Shares

Why is the Temple & Webster share price surging 11% on Monday?

Why are Temple & Webster shares rocketing 11% today?

Read more »

a man sits at his computer screen scrolling with his fingers with a satisfied smile on his face as though he is very content with the news he is receiving.
Retail Shares

Why is the Kogan share price soaring 6% on Monday?

The online retailer's share price is rebounding on Monday.

Read more »