Bubs cuts US staff as it readies for FDA visit

The US Food and Drug Administration will audit Bubs Australia’s Deloraine, canning facility in Victoria next week as the infant formula company further axes jobs at its US office.

Former Bubs CEO Kristy Carr and executive chairman Dennis Lin are also suing Bubs and the non-executive directors of the baby formula group – Katrina Rathie, Steven Lin, Reg Weine and Paul Jensen – in the Victorian Federal Court over their removal from the company co-founded by Ms Carr.

It is understood that non-executive director Mr Weine and interim chief executive Richard Paine flew to the US at the weekend and have since culled two employees, Laura Dowling and Erin Banks.

Ms Dowling is the most senior person in the US business, acting as the chief marketing officer, while Ms Banks was a more junior head of influencer marketing, according to LinkedIn. Ms Dowling, a former divisional VP of North America marketing at fashion house Coach, only joined Bubs five months ago.

A Bubs spokesman confirmed the two staff redundancies and the visit by the FDA authorities. The US FDA inspection is part of Bubs’ process of getting permanent access to sell tins in the US market.

“We are incredibly excited about Bubs’ opportunity in the United States and the visit of the Food and Drug Administration next week, and we will continue to invest, intelligently and with discipline, to fully exploit that opportunity, including via the remaining 18 people in our US team,” he said.

“The leadership change we made is to establish a single leader of our US business to best achieve our growth objectives.”

Australian Chris Lotsaris, who is head of sales in North America, is now leading the US operations.

Dissident shareholdersMs Carr and Mr Lin are part of a group of dissident shareholders looking to spill the board led by chairwoman Ms Rathie, and install former a2 Milk executive Peter Nathan as the new CEO along with James Jackson, who has been nominated as Bubs’ non-executive chairman. Rupert Soar is vying for a non-executive director seat.
Since leaving Bubs, Ms Carr and Mr Lin have set up their own boutique advisory firm.

Sources said Bubs’ US team was told that operational changes were needed in the Los Angeles office. Bubs also let go of three of the most senior staff at its China operations recently as part of a wider review.The news comes just days after Bubs said its US performance remains on track as it works to meet all regulatory milestones to allow it to permanently sell in the world’s second-biggest formula market.A spokesman added that prior management had made “spending commitments that would inevitably place unsustainable pressure” on Bubs’ limited resources.

“Their failed China strategy has left the company with a large amount of excess inventory, fundamentally constraining Bubs’ ability to sell more product into the China market,” he added.“No business should spend shareholders’ funds lightly, and because of the reduced revenue from China, Bubs is restructuring some teams to ensure spending is focussed where it will deliver maximum value for shareholders.”The spokesman said the company and its directors rejected the legal claims and would “vigorously oppose” the action.