Bubs share price drops despite new Target deal

The Bubs Australia Ltd (ASX: BUB) share price finished the day 3% in the red at 62.5 cents apiece on Wednesday.

Investors sold off Bubs shares despite the company posting a sensitive update regarding its US retail footprint.

In broad market moves, the benchmark S&P/ASX 200 Index (ASX: XJO) closed the day 60 basis points higher at 6,746.

Bubs’ new Target deal

The company advised that it has entered into a new supply agreement with Target USA. It says Target is one of the largest infant formula retailers in the US.

“Target’s initial purchase order will be fulfilled from the third Operation Fly Formula air cargo shipment,
arriving in the U.S. on 26 June, with direct distribution to 280 Target stores,” the company announced.

Bubs says that gross revenue generated from this plane is to the tune of $3 million.

As a result of the deal, Bubs notes its products will be available in the 4 largest retailers of infant formula in the U.S. with coverage in 5,000 stores across 34 States [in the US].

Bubs Founder and CEO, Kristy Carr said the company was “delighted to enter a new partnership with Target”.

Since receiving the Enforcement Discretion from FDA to import six Bubs Infant Formula products on 27 May 2022, or less than a month ago, our products will be ranged in all four top retailers for infant formula in the USA. By mid-July, we expect over 360,000 tins of Bubs Infant Formula to have been made available to major retailers. This is an extraordinary outcome, thanks to our American sales team who have built a relationship with retailers over the last 12 months.

The market was mute to the news today and sold off shares in line with a weaker consumer defensives sector.

Volume was more than half of the 4-week trading average at 7.2 million shares.

In spite of the downside, the Bubs share price has still managed to clip a 36% gain in the last 12 months and 31% this year to date.

The post Bubs share price drops despite new Target deal appeared first on The Motley Fool Australia.

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