The Blackmores Limited (ASX: BKL) share price has come under a spot of pressure today.
In morning trade, the health supplements company's shares are down 2% to $82.82.
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Why is the Blackmores share price under pressure?
Investors have been selling Blackmores' shares this morning following the release of its shareholder briefing presentation.
As well as giving shareholders a rundown on how it performed during the first half, Blackmores provided an update on current trading.
According to the release, inbound spending is significantly down in Australia driven by the absence of international students and tourists (daigou shoppers). This has led to a significant reduction in the share of Australian health supplement sales to Chinese consumers.
At the end of the third quarter of FY 2021, just 10% of Australian health supplement sales were made to Chinese consumers. This is down from ~25% prior to the pandemic.
Management expects this weaker consumption to persist well into 2022 and until regular international travel resumes.
In addition to this, the company notes that a significantly milder cold and flu season has resulted in surplus stocks in the pharmacy channel.
What else is happening?
Another headwind the company is facing is that the Australian vitamin and dietary supplement category has been impacted by structural shifts as a result of COVID-19. Sales in the grocery channel have been growing at the expense of the pharmacy channel. Traditionally, the latter channel has stronger margins, though management didn't comment on this.
One positive, though, is that Blackmores sees the shift online as an opportunity. In light of this, it is accelerating its digital transformation in order to benefit from the trend.
It has also set itself the bold target of connecting "1 billion people to the healing power of nature through our brands" by FY 2024.
But judging by the Blackmores share price performance today, some investors appear to be waiting to see how long the headwinds it is facing last before focusing on its longer term aspirations.
