Blackmores expecting weaker growth to persist ‘well into 2022’

Vitamins and wellbeing company Blackmores says it ‘can’t just sit back and wait for borders to re-open’.

Blackmores chief executive Alastair Symington.

Vitamins and wellbeing company Blackmores says it “can’t just sit back and wait for borders to re-open” as chief executive Alastair Symington looks to further harness e-commerce to drive growth.

Mr Symington said despite Australia experiencing a “V-shape” economic recovery, and China bouncing back from the pandemic, the education, tourism and healthcare sectors were yet to rebound.

And he expected weaker growth to persist until “well into 2022”, with Blackmores — like other companies whose products are popular in China — hit by the collapse of the daigou market.

“It’s encouraging that we start seeing recovery at the macro level. When you look at the top line indicators, Australia has done an extremely good job at managing through COVID-19,” Mr Symington said.

“A lot of the recovery is being led through the usual suspects like housing and mining. But certainly if we look at household consumption, there’s key areas which have been impacted.”

In a market update on Thursday, Mr Symington said the absence of international tourists and students drove down inbound spending to 1.5 per cent of gross domestic product by the end of 2020, versus 3.6 per cent the previous year.

“We break down the category into what I would call domestic consumption and then consumption that goes out to Chinese shoppers outside Australia. And we are relatively flat domestically.”

Following the update, Blackmores shares dived, closing 4.3 per cent lower at $80.60 on Thursday compared with a 0.8 per cent gain across the broader sharemarket.

Mr Symington said Blackmores could not wait for international borders to re-open and had to think more long-term to shore-up the company.

“In the near-term, there’s a lot of uncertainty around border closures and the vaccine rollout generally. Until there is more certainty, and I don’t believe that there will be more certainty on the free flow of international travellers — and even students — until probably the end of next year.

“But long-range, long-term, there are three things we can do in Australia because we need to pivot and can’t just wait for borders to re-open.”

He said the first thing was to focus on delivering innovation. An example of this is Blackmores’ pet care range recording 50 per cent growth in the first half of the year to become the company’s fastest growing brand.

Mr Symington said the company also needed to be channel specific.

“We can’t just have a one size fits all product offering across all our retail outlets”.

Thirdly, Mr Symington said Blackmores needed to continue leveraging e-commerce, which has exploded during the pandemic.

“We find that 60 per cent of online consumers are using e-commerce sites, chemistwarehouse.com or woolworths.com to gather information before they make a purchase.”