Bellamy’s, whose share price has been savaged since sales of its organic infant formula hit a wall in China, now faces a class action alleging misleading conduct.
A short time ago, its shares were down 3.5% to $3.87 — well down on its high of $15.38.
The company earlier this month pushed out its CEO, Laura McBain, and cut its profit guidance again.
Bellamy’s now expects full year revenue to be in the range of $220 million to $240 million, at best flat on 2015 and well below previous analyst expectations of about $330 million.
Today lawyers Slater and Gordon announced it had joined litigation funder IMF Bentham to investigate a claim against Bellamy’s on behalf of those who acquired shares in the Tasmanian-based company between April 14 and December 9, 2016.
Bellamy’s made an announcement to the ASX in April last year about regulatory changes in China titled “Bellamy’s well placed to continue growing in China”.
However, an update in December saying sales had stalled in China sent the share price down by about 45% and has continued to fall since then.
Bellamy’s has had to renegotiate contracts with suppliers to wind back production.
Much depends on whether sales will recover in China as the warehouses there empty and supply returns to more normal levels.
And the company still faces a shareholder push to change the board of directors.
Jan Cameron, the founder of adventure clothing store Kathmandu and a shareholder in Bellamy’s isn’t happy with the departure of the CEO.
She says the board of directors seem to have pushed all the responsibility for problems onto McBain, making her the scapegoat.
Cameron is part of a group of shareholders, including the biggest shareholder, Black Prince Private Foundation with 14.48% of Bellamy’s shares, which wants to spill the board of four directors, retaining only the current chair, Rob Woolley.
The shareholder meeting to decide the board makeup will be held in Melbourne on February 28.