Bubs Australia has entered a trading halt pending an announcement on a $28 million capital raise. In a statement to the ASX, the company said the raise would be used to fund its US expansion plans.
A report in The Australian Financial Review said the raise would be split across a placement and share purchase plan. The 12.5 cent share offer price was at a 24.2 per cent discount on the last close.
At Bubs’ AGM (14 November), chair Katrina Rathie said despite disappointing share performance, there was evidence the strategic plan announced in July was already having an impact.
Rathie said a highlight from the last 12 months was the company’s progress towards its goal of permanent market access to the US, the second largest infant formula market in the world and worth $8.1 billion. The US Federal Drug Administration (FDA) completed its audit of the Deloraine canning facility. Bubs also successfully completed a protein efficiency ratio study and started patient enrolment for its clinical trial.
CEO Reg Weine said the 57 per cent increase in marketing spend was invested in the US, where Bubs holds 95 per cent of the goat infant formula market.
He echoed Rathie's comments re FY23’s poor financial performance, but told shareholders the company had, “completely de-risked the balance sheet and are now investing for growth”.
“The USA remains our big bet and growth engine and we have grown revenue 200 per cent year on year, and we expect FY24 revenue to grow by a further 100 per cent over FY23,” Weine said.
In the US, Bubs is in most of the major brick and mortar retailers and stocked in around 5900 outlets.
“The biggest driver of our recent US sales performance outside of Amazon, has been the increased throughput or velocity in each retail store on the back of new in-store planograms, better shelf visibility, and the effectiveness of our trade marketing activities and in-store activation," he said.
Amazon now accounts for 54 per cent of Bubs’ US revenue, up from 17 per cent in less than a year.
“We are now averaging more than $400,000 a week in Amazon and we have the fourth and eighth best-selling infant formula products on the Amazon platform, which is amazing,” Weine said.
