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Infant formula company Bubs Australia (ASX: BUB) has sharply downgraded its full-year revenue guidance to between $105 million and $115 million as regulatory hurdles, geopolitical disruption in the Middle East and competitive pressures weigh on the business.
The target is down from a range of between $120 million and $125 million projected just three months ago.
The trading update issued today has also warned that EBITDA could plunge to a $2 million loss, or at best a $2 million profit, down from the $4-6 million profit flagged at its half-year results in February 2026.
The downgrade follows a period of strong momentum for Bubs, which posted FY25 revenue of $102.5 million - up 29 per cent on the prior year - and swung to a statutory after-tax profit of $5.5 million.
First-half FY26 revenue came in at $55.5 million with underlying EBITDA of $4.4 million, prompting the company to upgrade its guidance at the time.
Bubs points to a range of headwinds behind the revision, including evolving regulatory requirements, product availability constraints, increased air freight costs associated with restocking its US operations and competitive pressures across its key markets.
Geopolitical disruption in the Middle East is also cited as a factor, adding complexity to the company's supply chain and distribution channels.
Despite the downgrade, the company's US retail expansion remains on track.
Bubs says it expects to reach more than 10,000 stores by July 2026, a substantial increase from the 8,646 stores reported at the end of the third quarter and up from 4,368 at the start of the financial year.
“We have taken a careful and disciplined approach to managing our supply chain in a more complex external environment," says Bubs CEO Joe Coote.
"We are seeing continued growth, supported by expansion in the USA, and have taken targeted actions to navigate evolving conditions.
“That has meant carrying additional costs in the short term, but it has also allowed us to move quickly and position the business to meet our growth ambitions.”
Outside of this impact, Coote says demand for Bubs products remains intact.
"Our focus remains on converting that demand into sustainable growth by expanding distribution and continuing to invest in brand activation and other strategic initiatives that will strengthen the business over the long term,” he says.
“The United States remains our strongest growth market and a key part of our strategy. The use of air freight to support re-stocking in the USA is concluding as we continue to prioritise customer service.
"We remain on track to achieve ranging in over 10,000 stores in July 2026.
“We maintain a strong balance sheet and appropriate liquidity, which gives us the flexibility to manage near-term challenges while continuing to execute our strategic priorities with financial discipline.”
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