Zoe Foster Blake’s skincare brand Go-To has distanced itself from shareholder BWX, the house of natural brands on the brink of collapse today.
After suffering a staggering statutory loss of $335 million in FY22, BWX has been attempting to refinance its loans with Commonwealth Bank since November. Commonwealth’s agreement to not act on loan breaches ended last Friday, which meant BWX needed to find another arrangement with Commonwealth or other financiers by today or declare bankruptcy, according to the Sydney Morning Herald.
Ahead of the announcement, Go-To stated their independence from the cosmetics group that owns 51 per cent of the skin-care brand:
“Go-To operates as an independent entity, managing its own treasury, formulations, manufacturing and retailer relationships. We have an independent Sydney-based team led by our CEO, Brad Dransfield, and no financial, manufacturing or supplier affiliations with BWX,” the company said.
“The Go-To business is in a strong position with year-to-date performance seeing double-digit growth.”
Go-To, recently launched in retail stores across Europe with 220 stores operated by German retailer Douglas.
“This is a key milestone for the Go-To business and our growing international community,” Go-To, chief marketing officer, Leonie Faddy, said.
Unlike Elsa Pataky’s beauty brand Purely Byron, which went bankrupt in March, Go-To is profitable.
Go-To is also in a unique position, as an option enables Foster-Blake and other investors to elect to sell their 49 per cent stake to BWX for $59.2 million cash.
BWX chairman Steve Fisher explained the group’s losses in his address at the BWX Limited Annual General Meeting in February:
“These include customer de-stocking in key channels, cash constraints leading to out-of-stock as well as the effect of promotional campaigns which continue in channels even where de-stocking occurred.
“Operating expenses were affected by higher external costs as a result of debt restructuring initiatives, restructuring charges and higher doubtful debt provisions due to processing delays with customer claims. We also recorded a non-cash impairment of approximately $60 million.”
The suspension of channel stuffing and the resulting cash constraints, had put BWX on the brink of collapse before billionaire Andrew Forrest saved the group in July of last year.
Channel stuffing is a way to inflate a company’s revenue before a reporting period by selling more products to retailers than can be sold to consumers.
This meant that retailers had to sell a backlog of goods, and while BWX still had to advertise these products, it didn’t receive any cash from these sales which were already paid-for.
While Commonwealth Bank had waived loans until March 31, there has been no agreement that the waiver would continue past this date.
“Discussions are under way between the company, its lender and various parties who may provide additional debt and/or equity funding or replace its existing debt funding.”
