Update (5/4/23): KPMG Australia's David Hardy, Gayle Dickerson, James Stewart and James Dampney were appointed as the receivers of BWX's Australian operations yesterday and have assumed day-to-day control of the company.
BWX Limited (ASX: BWX), the beleaguered owner of skincare brands including Sukin, Flora & Fauna, Nourished Life and more, has appointed voluntary administrators to its Australian operations overnight as the company comes to terms with mounting losses and struggling subsidiaries.
Announced to the ASX after the market closed yesterday, BWX appointed FTI Consulting as the voluntary administrator of its Australian operations which will trade on a business-as-usual basis until an outcome is ensured.
The administration does not include the company’s businesses outside of Australia and Zoë Foster Blake’s Go-To brand. Instead, BWX says the administrators will continue the sale process of the company’s 50.1 per cent shareholding in Foster Blake’s skincare brand.
BWX said a ‘range of issues’ led to the collapse of the company and the appointment of FTI’s Kate Warwick, Joe Hansell and Kelly Trenfield as voluntary administrators.
“A range of issues have continued to impact the Australian operations of BWX, including customer destocking and inventory and working capital issues necessitating the director’s decision to appoint administrators,” BWX said.
“The directors believe entering voluntary administration will help progress the restructuring process already underway with new management at BWX and give the company the best chance of future profitability.
“The directors will work with the administrators to ensure a positive outcome in the administration, with employees and customers remaining a top priority.”
The separation of Go-To from the administration is the result of the business being managed independently of BWX with a wholly separate treasury function and separate cash flow management, including accounts payable.
Further, Go-To has its own independent team from BWX across all departments of the business.
“Go-To does not utilise any BWX manufacturing or development capabilities and proudly supports its retail partners via its sales and retailer management team out of Sydney,” BWX said.
The company’s collapse comes just over a week after the company had its shares voluntarily suspended from trading in the wake of the group’s CEO departing the company, mounting losses, and the separate voluntary administration of one of its owned brands Purely Byron.
Signs of trouble at BWX have been brewing for some time but came to the fore in late-January when the group slashed its expectations for full-year revenue and earnings figures after second-quarter sales revenue came in ‘significantly below’ internal targets.
That announcement led BWX to cut revenue expectations from $205-230 million to $170-190 million, following on from FY22 statutory losses of $335.6 million.
Prior to that, BWX spent a large part of 2022 suspended from trading on the ASX due to a delay in reporting its FY22 results which were eventually delivered in December last year - months after ASX requirements dictate.
The company was only reinstated to trading on 20 December 2022, upon which its shares fell by 52 per cent to 30 cents per share.
Since the January trading update, BWX revealed its losses blew out to $100 million for the first half of FY23, leading to the immediate departure of CEO Rory Gration from the position he had held for less than a year.
That first half result included more than $60 million of impairments relating to the carrying value of intangibles, contract assets write-down and a write-down of its investment in skincare brand Purely Byron.
Revenue also fell by 18.4 per cent to $79.7 million which BWX says is because of several factors including customer de-stocking in key channels, lower cash receipts and capital commitment outlays for the company’s Clayton manufacturing facility, the inability to maintain inventory at optimum levels, and out-of-stock issues in Australia, international and digital business segments.
As with the group’s Q2 results, auditors raised red flags and noted there was ‘material uncertainty whether the group [would] continue as a going concern’.
Soon after in mid-March Purely Byron - founded by Elsa Pataky and co-owned by her husband Chris Hemsworth - was placed into voluntary administration.
DW Advisory was appointed to run the administration process for Purely Byron which counted BWX as a substantial shareholder with a 48 per cent holding. BWX’s chief financial officer Birol Akdogan was asked about Purely Byron’s administration at the time but refused to comment.
In the period since Purely Byron’s collapse, BWX was relatively quiet on the boards but requested its shares be suspended from trading on the 24th of March.
At the time, BWX said the suspension would give it time to procure additional debt and/or equity funding or replace its existing debt funding in order to execute restructuring plans, address its rundown of inventory and continue the sale of its non-core assets.
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