The disappearance of “daigou” shoppers, who used buy from Australian stores to sell online in China, is having a major impact on Blackmores.
The vitamin maker says sales fell 6.7% to $496 million for the first nine months of the financial year and net profit after tax was down 42.8% to $43 million.
However, CEO Christine Holgate says the company finished the third quarter slightly ahead of the second quarter despite fewer trading days.
At the close, Blackmores shares were up 3.8% to $106.49.
“Our profit result for the first nine months was impacted by lower sales in Australia for Blackmores which was compounded by the higher cost of operating in those channels,” says Holgate.
She says Blackmores Australia sales have steadily grown over each quarter of the year.
“This has still not been enough to make up for the decline in sales through Australian retailers to entrepreneurs selling to consumers in China that so heavily influenced the Australian market in the prior year,” she says.
The so-called daigou shoppers, many of them Chinese students financing university by buying and selling vitamins and infant formula, faded when China announced stricter regulations on imports.
Other companies selling in China, including infant formula makers, have also been hit by changing regaultions.
Chinese consumers are now buying through multiple channels. Blackmores export sales increased 60% to $92 million in the nine months.
The company expects full year profit will represent good growth on the 2015 financial year but won’t match the 2016 “exceptional performance” of $100 million, which was up 115%.
The latest results at a glance:
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