Bubs shares surge on Walmart stores deal in US

Bubs Australia has struck a deal with one of North America’s largest retailers, Walmart, to stock its products in about 800 stores.

Co-founder and chief executive Kirsty Carr says Bubs is ‘tremendously excited’ by the deal. Picture: Jane Dempster

Bubs Australia has struck a deal with one of North America’s largest retailers, Walmart, to stock its products in about 800 stores.

The ASX-listed infant nutrition and dairy specialist has had a stellar run in the past month after signing an agreement with the Biden administration to ship 1.25 million cans of infant formula to the US, which is suffering from a crippling national shortage.

The US Food and Drug Administration last month gave Bubs approval to import several varieties of the infant formula. That made the company the third international manufacturer to strike a deal with US authorities.

On Thursday, Bubs said Walmart would purchase a shipment of six infant formula products and a further two toddler formula products, which would be distributed to about 800 stores in the US.

“The addition of Walmart will increase our bricks-and-mortar exposure in the US over the coming days and weeks to around 4800 stores across 35 states,” Bubs chief executive Kirsty Carr said.

Under the agreement, Walmart will purchase the entire shipment comprising about 85,000 tins of Bubs Formula, filling a Boeing 747-400 cargo aircraft chartered by the US government.

Those Bubs tins left Melbourne bound for Columbus, Ohio on Thursday afternoon.

“We are tremendously excited to be forging a relationship with Walmart, with all of Bubs … products going on shelf in approximately 800 stores across America’s Central and Mid-West regions,” Ms Carr said.

The company has previously struck agreements with the Kroger and Albertson chains.

Bubs shares rose 7.1 per cent – or 4c – on Thursday to 60c. They have risen more than 40 per cent in the past month alone.

But Bubs chairman Dennis Lin and Ms Carr have come under some criticism for significantly increasing their salaries – Mr Lin’s will increase from $150,000 to $350,000 from the start of next month, and his directors fees will rise by about 70 per cent.

In a note to clients earlier this week, Shaw & Partners broker James Nicolaou said the increase “fails the pub test”. He added: “That’s not my beef. My issue is that they haven’t paid back a single dollar of the $309,000 of taxpayer money they received via (the government’s wage subsidiary scheme) JobKeeper given the cash they are splashing around.”

The US has long been a pipe dream for Australian infant nutrition companies, with local ­giants Abbott, Meade Johnson and Nestle effectively barring access. Australian companies face their best chance of gaining a foothold in the market after a bacterial contamination at Abbotts shut down its factory in Michigan, exacerbating a formula shortage.

Unlike Bubs, the larger ASX-listed A2 Milk is yet to gain FDA approval, with the trans-Tasman company submitting its application late last month. Normally it takes about 18 months to secure approval to sell infant formula.