Ann: USA Update, page-8

From AF R today

Bubs Australia says it is building momentum in all channels in the United States with its full-year sales tipped to come in at the upper end of its guidance.

The goat milk formula and baby snacks manufacturer said it remained on track to meet all regulatory milestones for permanent access to the world’s second-biggest baby formula market.The US Food and Drug Administration (FDA) audited its Deloraine manufacturing facility in Victoria last week, as first revealed by The Australian Financial Review.

Bubs reported its first $1 million monthly sales on the Amazon platform in May, and the Bubs direct to consumer business has grown strongly with year-to-date revenue of $1.8 million. US revenue was expected to be at the upper end of the previous forecast range of $20 million to $22 million, compared with $8.1 million in fiscal 2022.

The company confirmed reports by the Financial Review that Australian Chris Lotsaris was appointed general manager of the US business, based in California. His appointment came after Bubs fired two senior marketing staffers.

Mr Lotsaris had been sales director of Bubs US and Australia since 2018. He has more than two decades’ experience working in consumer goods including with Mars, Danone and Lactalis, the company said in a statement to the ASX.Bubs was one of the first Australian infant formula companies to have an FDA auditor visit for permanent access to the US.

Early June FDA authorities were on-site for a week in Victoria.The company expects to receive the FDA’s written audit compliance report in coming weeks.Bubs interim chief executive Richard Paine said the company was making “steady and pleasing progress against the key regulatory pathway milestones”.Bubs has yet to call an extraordinary meeting where shareholders will vote to instal a new board or keep the current one led by chairwoman Katrina Rathie.

Former Bubs CEO Kristy Carr and executive chairman Dennis Lin are part of a group of dissident shareholders looking to spill the board and instal former a2 Milk executive Peter Nathan as CEO, with James Jackson nominated as non-executive chairman. Rupert Soar is vying for a non-executive director seat.

Ms Carr and Mr Lin are also suing Bubs and the non-executive directors of the baby formula group – Ms Rathie, Mr Lin, Reg Weine and Paul Jensen – in the Victorian Federal Court over their removal from the company co-founded by Ms Carr.Tensions rose at Bubs over the past year as two board factions fell out over the China strategy.

Bubs is sitting on excess baby formula inventory due to slower sales from its key distributor partner. Investors are still waiting for the board’s full findings of a review in the operations due by June 30.