Its a terrible result, for all concerned. Chasing volume at the expense of excessive margin erosion normally ends in tears.
I feel sorry for the employees of BWX, as surely many of them will be caught up in the CEO’s search for savings.
The part that I do not get is that they are taking Go-To into the supermarkets.
When Sukin entered the supermarkets, didn’t this destroy product margins and anger the pharmacy sales channel, which was one of their best performing customer segments? I think Sukin entering the supermarkets devalued the brand and was a significant contribution to the current state of play.
Go-To is meant to be a cool / cult brands and IMO, you do not buy a cool / cult brand in a supermarket. From memory, when Go-To launched, they sold exclusively in David Jones.
Sadly, it looks like the Sukin mistake is being repeated with the Go-To brand.
On the costs / supplier side, BWX will also struggle. Costs are going up everywhere and with their reduced volumes, their buying power and ability to negotiate with suppliers has probably reduced, so a double whammy when it comes to getting the business back on track.
I also think we will see a capital raising in the new year and more bad news out of BWX in 2023.
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