Andrew Forrest-backed skincare outfit BWX implodes with more boardroom departures in wake of $337m annual loss

Another three directors have quit the embattled skincare group, which boasts brands Sukin and Flora & Fauna, after posting a $337m annual loss and cutting earnings guidance.

The Forrest family-backed BWX has posted a $337m annual loss – with several directors leaving the skincare group after a torrid 12 months.

Shares in BWX – which sells Sukin, Andalou, Mineral Fusion and Zoe Foster Blake’s Go-To brands – have not traded since August, with the company flagging lower earnings this year.

In a statement, the company described the director departures as part of its “orderly board renewal”. But the group has been losing directors and key personnel ever since its former CEO, Dave Fenton, quit in March.

BWX’s largest shareholder is billionaire Andrew Forrest and his wife Nicola. Their nominee, Michelle Hepworth, left in September after six weeks while former chair Denis Shelley resigned from the board in August.

BWX chief financial officer Efee Peell quit last month after the company engaged EY to procure new debt financing.

The latest departures – of Ian Campbell from the chairmanship and Fiona Bennett and Rod Walker from the board – come as the company released its accounts ordinarily due by August.

They show a $322.6m writedown, while downgrading its revenue guidance for the financial year to between $205m and $230m. BWX expects earnings of between $25m and $30m excluding one-off items.

Part of the write down was related to Ms Foster-Blake’s business, which BWX took a 50.1 per cent stake in for $89m. The move may affect how much the entrepreneur will be paid for her remaining interest.

The company’s managing director, Rory Gration, said the result was “disappointing”.

“As a business we are facing into the challenges, by stopping historical unsustainable sale practices, recalibrating our cost base, and committing BWX to return to a stronger, more focused and disciplined organisation with a consistent revenue and earnings profile,” he said.

Sukin is one of the brands in BWX’s stable.

The writedown tipped BWX into a $337m loss for the year from a $17.5m profit in 2021. Stripping out the writedown, the company posted a $2.7m loss.

Reject Shop chair Steven Fisher will replace Mr Campbell in helming the BWX board. The company said Mr Fisher had more than 30 years’ experience in the consumer goods industry, with senior positions as chair of Breville Group and the managing director of Voyager Group. Mr Campbell will remain a non-executive director.

The Forrest family’s Tattarang Venture’s became a substantial shareholder in BWX in June, acquiring a 16.9 per cent stake in the company for $30.22m. It has since lifted that holding to more than 20 per cent.

BWX raised $95m in new equity in August last year to buy its stake in Ms Foster Blake’s Go-To but has faced criticism over the deal – which gave the brand an enterprise value of $177m – including an option to buy the remaining share by late 2024. But BWX said this did not mean it had to pay $88m to exercise that option – a move that could bankrupt the company.

“The partnership involves put/call options for BWX and Go-To co-founders – including founder, Zoe Foster Blake, for periods commencing in year three ... and on every subsequent anniversary. Valuation will be determined at the time of exit considering the outlook and performance of Go-To at the time. There are no price floors or earnouts,” the company said.

The group’s revenue increased 8.3 per cent to $198.3m in the year to June 30. Earnings before interest, tax, depreciation and amortisation slipped from $24.7m to $6.4m into the red.

“The decline in EBITDA was predominantly driven by the previously announced cessation of investment buys in June 2022, as well as an increase of 34 per cent in BWX’s operating expenses to $112.2m in FY22,” the company said. “Operating expenses in increased marketing, people and acquired growth expenses have grown significantly ahead of sales growth. As a result, the Company has implemented stricter financial disciplines to bridge this gap.”

The company rattled investors in June when it downgraded its full year earnings, prompting Citi and Macquarie slashed price targets and downgraded their ratings on the stock.

Citi’s note said BWX’s downgrade is “arguably its fourth disappointing update” this year and points to ongoing struggles following the exit of Mr Fenlon.

“In our view, executing a turnaround may be more challenging than expected given the combination of a weakening consumer environment and inflationary pressures,” Citi said.

Shares last traded at 63.