The McPherson's Ltd (ASX: MCP) share price continued its disappointing run and sank lower again on Wednesday.
The beauty products company's shares dropped 11% to $1.21.
This means the McPherson's share price is now down 60% over the last 12 months and trading within touching distance of a two-year low.
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Why did the McPherson's share price crash lower today?
Investors were selling McPherson's shares today following the release of a disappointing half year result.
Management blamed the same weakness in the daigou channel that has been impacting A2 Milk Company Ltd (ASX: A2M) and Blackmores Limited (ASX: BKL) for its poor performance.
For the six months ended 31 December, the company reported a 4.1% decline in sales revenue to $101.7 million.
Management advised that it achieved domestic sales growth of 6% during the first half. This was thanks to market share gains from four of its products. However, a 65% decline in export sales more than offset this.
On the bottom line, the company reported a 19.2% decline in underlying net profit after tax to $4.6 million. Though, it is worth noting that this underlying result does not include a $4.3 million provision for excess hand sanitiser inventory.
Despite its weak result, the McPherson's board has declared a fully franked interim dividend of 3.5 cents per share. This is down from 4 cents per share in the prior corresponding period.
Management commentary
McPherson's Managing Director, Grant Peck, commented: "McPherson's 6% revenue growth in the Australian market over the six months to 31 December 2020 illustrates the strength of our brand portfolio and our ability to deliver new product innovations to market. McPherson's is the second largest Australian supplier of beauty products to the Australian Pharmacy channel."
"Our existing brand portfolio, with its predominance in the beauty category, is now complemented by the recent acquisition of the Fusion Health and Oriental Botanicals brands and the establishment of McPherson's Health category. This acquisition, effective 1 December 2020, provides the Group with strong go to market capabilities and product innovation credentials in the Natural Health & Vitamins and Dietary Supplements category, which in Australia is part of the $5.63 billion Health & Wellness retail sales market."
Outlook
Management warned that there remains an elevated level of uncertainty due to the difficulty of forecasting demand in China.
Furthermore, it notes that consumer behaviour will be difficult to gauge in the short term following an unexpected slowdown in the market in the last quarter of last year.
As a result, it is unable to provide guidance at this stage. However, it suspects that its underlying profits will be materially below what it achieved in FY 2020.
