The Bubs Australia Ltd (ASX: BUB) share price is rising after reporting its quarter ending 31 March 2021.
Bubs March 2021 quarter
Bubs reported that its quarterly gross revenue was $11.8 million, with Bubs infant nutrition representing 62% of third quarter revenue. That represents a 40% decline compared to the pantry-stocking quarter period a year ago.
Third quarter domestic sales (including daigou) were down 52%, representing 51% of gross revenue.
However, there were areas of growth.
Bubs total infant formula went up 4% quarter on quarter. Chinese export sales went up 28% quarter on quarter, with Bub infant formula CBEC (cross-border e-commerce) sales growing 47% quarter on quarter.
The daigou channel saw 19% growth quarter on quarter, with infant formula daigou sales rising 38% quarter on quarter. Sales were down 15% on the prior corresponding period. It’s targeting growth across all channels.
Other international markets contributed 19% of gross revenue, declining 4% on the prior corresponding period and up 1% quarter on quarter. I think this area could be an important part of future growth for the Bubs share price
China
Bubs said its strategic focus is to actively drive revenue growth in China channel routes, including accelerating China online sales channels within CBEC and corporate daigou.
Branded English label products went up 42%. Bubs infant nutrition gross revenue rose 43%. CapriLac adult goat dairy gross revenue rose 38%.
There is growing offtake sales in the China CBEC channel. Bubs offtake sales increased 60% across Tmall, JD.com, Kaola and VIP. CapriLac remains the number one adult milk powder brand on Tmall Global with an 80% category share.
It also said it’s taking steps to maximise margin retention and operating flexibility in China and set up of Bubs wholly owned China subsidiary to replace the joint venture agreement with Beingmate, building on existing direct sales partnerships with China customers.
Australian retail sales growth
Bubs is still the fastest growing infant formula manufacturer across Chemist Warehouse, Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW), with retail scan data showing offtake sales up 37%.
The products are sold in even more stores. It also announced a new agreement with Good Price Pharmacy to range 28 Bubs infant formula and baby food products.
Outlook and thoughts on the Bubs share price
Bubs said that it expects to achieve modest half-on-half gross revenue growth for the second half of FY21.
It has $36.3 million of cash, so it’s still well funded to continue its growth for the longer term.
Bubs is now seemingly making progress in Australia, China and other international markets.
It’s certainly a higher-risk idea, particularly in this environment, but it seems that Bubs is at the start of a good double digit recovery. I’d be willing to buy a small parcel of shares today, particularly with how much it has fallen.
There are also other ASX growth shares I’m keeping track of.
