Not much has gone right for The a2 Milk Company recently.
In its fiscal year 21 (FY21), which ended on 30 June 2021, the infant milk formula and fresh milk specialist suffered a 30.3% decline in revenue to NZ$1.21 billion from the previous financial year. Gross profit dropped even more, falling 47.4% to NZ$509.7 million, because of write-downs from inventory overload at resellers and a big decline in a2 Milk’s high margin English-label infant milk formula products.
And things are not likely to improve in the next fiscal year with management providing some bleak remarks on the overall outlook for FY22.
As an investor with a vested interest in a2 Milk since July 2020, watching its share price slide 67% has, to put it mildly, not been a pleasant experience. The fact that the S&P 500 index has risen 47% over the same time makes it even more depressing.
So what went wrong?
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