A vitamins and supplements behemoth has been saved by pet products and a Chinese online shopping bonanza as store foot traffic in Australia plunged.
Vitamins giant Blackmores has flagged a second half sales slump as shoppers focus on the COVID-19 vaccine rollout instead of its products.
The company booked a modest 4 per cent rise in statutory net profit to almost $19m for the six months to December 31 on Wednesday.
However, the health crisis had had a negative impact on traditional retail channels and shopper behaviour, chief executive Alastair Symington said.
Travel restrictions have meant fewer “daigou” shoppers – often international students who buy products to resell back home – and combined with rolling lockdowns has slashed traffic in Australian shops.
Also, sales usually linked to the cold and flu season were down sharply.
Blackmores said that to achieve long-term sustainable growth in Australia and New Zealand, it was “balancing discounting and price promotions with channel-specific brand campaigns that deliver distinctive consumer value propositions”.
The company’s increasing bid to capitalise on the growing global trend of health products for pets is paying off here and in New Zealand, with revenues from its Pure Animal Wellbeing range soaring 53 per cent.
Also, among households with pets, brand awareness hit 82 per cent, Blackmores said.
In its all-important Chinese market, revenue jumped 27 per cent, which the company heavily credited to Double 11 – the Singles’ Day online shopping festival on November 11 – which is bigger than Black Friday and Cyber Monday combined.
The pandemic has brought mixed fortunes to Blackmores, with periodic surges of demand in parts of South East Asia linked to COVID-19 outbreaks.
But markets such as Singapore, Hong Kong and Korea performed poorly due to the virus and accompanying travel restrictions.
Indonesia is the company’s fastest-growing market, driven by the expansion of its distribution footprint and in-store pushes by more than 300 product advisers.
Thailand and Malaysia recorded double-digit growth, and the infant formula business in Vietnam continued to perform strongly, Blackmores said.
On the second half outlook, the company said revenue growth in Asia would continue, with positive signs of health and economic recovery under way.
But the Australian vitamin and supplement market would stay challenging as international borders remain closed, while the focus on the vaccine rollout would disrupt consumer behaviour for at least the rest of the 2021 calendar year.
Goldman Sachs said the result was modestly ahead of expectations, cash flow remained strong and Blackmores was on track to achieve $18m in cost savings for the full year.
Blackmores also revealed it received $10.4m in government assistance, mainly JobKeeper, and had decided to pay back $2.4m, saying that was more than it needed to counter the costs and financial impacts of the health crisis.