A2 had already downgraded its profit forecast earlier this year after a plunge in student and tourist arrivals from China caused a sharp drop in the number of daigou resellers,but on Friday it warned the impact had been “more significant and protracted than was previously anticipated”.
“We believe[the recovery is] going to come slower from what our original expectations were,” interim chief executive Geoff Babidge said. “Our expectation is there will be progressive improvement during the second half,but not as fast as we had previously expected.”
The hurting daigou business has also begun to bleed into A2 Milk’s other sales channels,including its broader cross-border e-commerce (CBEC) business,as daigou sales often help stimulate demand for direct orders.
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The company now expects its revenue for the 2021 financial year to be between $1.4 billion and $1.55 billion,a $250 million to $500 million drop on its September guidance. Margins are also expected to be between 3 and 5 per cent weaker than prior forecasts.
Mr Babidge said the business was in “uncharted territory”,but was hoping to alleviate some of the loss by focusing on bolstering its CBEC channel along with A2 Milk’s own China label range,which the company sells through a range of mother and baby stores in the country.
“We’re obviously continuing to ensure that we are driving forward those parts of the business that are performing well,but also we are looking at whatever we can do to support assisting the restoration of the daigou channel,” he said.