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How BWX Turned The Corner This Year?

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

BWX Ltd (ASX: BWX) controls four main brands, Sukin, Andalou Naturals, Mineral Fusion and Nourished Life. The company recently announced strong sales momentum in the United States, with the relaunch of mineral fusion gaining strong traction with consumers. The company’s flagship Sukin Brand is now performing well, with the brand stocked in an additional 448 US stores.

BWX has more than doubled over the last few months, leading some investors to conclude the tide has turned for the embattled skincare company (Credit: Nourished Life)


Following the acquisition of the Andalou Naturals and Mineral Fusion brands, BWX aimed at embarking on a multi-brand cross-selling strategy to generate acquisition synergies. This involves approaching companies which BWX has long-standing relationships with through the Sukin brand and asking them to sell products produced by other companies they own. Since these BWX customers have a trusted business relationship with the company and are happy customers, it should theoretically be much easier to upsell them.

The strategy was, unfortunately, not as easy to implement as management had the market believe, which led the company to de-rate substantially from the elevated multiples it was trading on. The strong recent results, where the company announced 1.2pps gross margin improvement between H1FY19 and H2FY19, along with maintaining revenue from the previous year. This has led some investors to believe that the worst is over for BWX, and the company can once again return to growth. In the view of bulls, this is sufficient to justify the company’s elevated multiples.

BWX concentrates on the natural/ organic segment of the personal care market, which is projected to grow much faster than the broader industry average over the next few years. Products within that segment are particularly popular with millennials, who are more willing than most other consumers to pay more for products with natural ingredients. This enables BWX to pivot towards eCommerce channels, while also profiting from pressure on retailers to stock environmentally friendly and ethically sourced products.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

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ASR has no position in any of the stocks mentioned.

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