Why the McPherson’s (ASX:MCP) share price is sinking lower again

The McPherson’s Ltd (ASX:MCP) share price is on the move today after revealing the sudden departure of its CEO after a difficult year…
The post Why the McPherson’s (ASX:MCP) share price is sinking lower again appeared first on The Motley Fool Australia. –

man bending over to look at red arrow crashing down through the ground

The McPherson’s Ltd (ASX: MCP) share price is dropping lower again on Thursday.

At the time of writing, the health, wellness, and beauty products company’s shares are down 6.5% to $1.17.

This means the McPherson’s share price is now down over 65% from its 52-week high of $3.40.

What did McPherson’s announce?

This morning the company announced that its Chief Executive Officer and Managing Director, Laurie McAllister, has resigned with immediate effect.

This follows a dreadful year for McPherson’s which has seen the company’s performance and share price deteriorate materially.

What happened this year?

During the first quarter of FY 2021, the company recorded a decent 4% lift in sales to $49.7 million.

However, it appears as though it tried to take advantage of the incredible demand for hand sanitiser at the height of the pandemic and this ultimately backfired.

While McPherson’s reported an 84% lift in underlying profit before tax to $2.9 million, this excludes a hefty $5.7 million non-recurring full provision for the write down of its hand sanitiser inventory.

Management advised that delays in the supply of hand sanitiser products led to a customer cancelling the majority of its orders. This left it with a significant quantity of product.

Since then, the strong demand has dissipated and the supply base for such products has become much more competitive. As a result, McPherson’s has been left holding excess quantities of hand sanitiser inventory.

Unfortunately, it went from bad to worse from there. At the start of December, the company revealed that its Chinese Singles’ Day sales fell well short of target.

Once again, this left its China joint venture partner, Access Brands Management (ABM), with higher than forecast inventory levels at the end of November.

As a result of this, the company was forced to withdraw its guidance.

What’s next?

McPherson’s has revealed that Non-Executive Director, Grant Peck, will replace Mr McAllister on an interim basis, effective today. It feels this will provide continuity and aid the transition to a new permanent CEO and Managing Director.

This continuity will be very important given that it only completed the acquisition of the Global Therapeutics business from Blackmores Limited (ASX: BKL) on 1 December.

The board advised that it will now initiate the necessary steps to identify and appoint a permanent CEO and Managing Director and will make a further announcement in due course.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the McPherson’s (ASX:MCP) share price is sinking lower again appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!