Bubs Australia Releases Strategic Review Outlining Growth Plan Bubs Australia Limited

Bubs Australia Releases Strategic Review Outlining Growth Plan

Bubs Australia Limited (ASX: BUB) has unveiled the findings of its comprehensive Strategic Review, which was conducted over the past two months. The review aimed to strategically manage the company's operations in the USA, Australia, and China, with a focus on responsible capital management and driving growth to deliver value to shareholders.

Katrina Rathie, Chairman of Bubs, highlighted the key points of the 5-point plan outlined in the Strategic Review. She stated, "The Strategic Review sets out a 5-point plan to responsibly manage capital and to grow and maximise shareholder value. " The plan encompasses the following initiatives:

1. USA Growth Engine:
Bubs plans to expand further into major retailers, including Grocery & Pharmacy, and increase sales velocity in the USA market. The company will drive growth and scale through e-commerce platforms and seeks to secure permanent access to the market by obtaining FDA approval.

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2. China Reset:
Bubs has implemented a reset of its operations in China, introducing a multi-channel go-to-market strategy with new leadership and trade partners. The company will focus on areas where it holds a clear competitive advantage, such as goat infant milk formula (IMF) and goat adult milk powder, to capture market opportunities.

3. Portfolio Optimisation:
With its hero goat product segment, Bubs has established itself as a market leader, pioneering the IMF category in both the USA and China. The company's strategic focus will be on premiumization, repositioning bovine IMF products, product rationalization, innovation, and increased investment in core brands.

4. Sweat Existing Assets:
Bubs' state-of-the-art manufacturing facility in Deloraine, Victoria, currently operates at approximately 31% capacity. The company aims to enhance shareholder returns by exploring opportunities to boost utilization, such as obtaining State Administration for Market Regulation (SAMR) registration for China, toll manufacturing, and selective private label partnerships.

5. Working Capital:
Bubs has successfully reduced annual operating expenses by around $10 million. Additionally, the company expects to halve its monthly cash burn from approximately $5 million to $2 million, starting from Q2 FY24. Growth plans are fully funded, and efforts will be made to liquidate excess inventory. Bubs will maintain its marketing investment at 15% of net sales, supporting its growth markets and core brands.

The Strategic Review sets the blueprint for Bubs Australia's future growth and value creation, with targeted plans for each market specific to the company's strengths and growth opportunities. By responsibly managing capital and executing the outlined strategies, Bubs aims to solidify its position as a key player in the global infant and adult formula market.

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