Full Year 2026 McPherson's Ltd Earnings Call
Speaker #2: Thank you for standing by, and welcome to the McPherson's Limited FY26 Results Investor Call. All participants are in listen-only mode. There will be a presentation followed by a question-and-answer session.
Speaker #2: If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad.
Speaker #2: And if you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Brett Charlton, Chief Executive Officer.
Speaker #2: Please go ahead.
Speaker #3: Good morning, everyone. Thank you for joining us for our FY26 results presentation. I'm Brett Charlton, CEO and Managing Director of McPherson's, and with me today is Mark Sherwin, our CFO.
Speaker #3: As always, I'll begin by referring you to the disclaimer on Slide 2 and ask that you take the time to read it. Today, I'll cover our FY26 highlights, the progress we've made through the year, and provide an update on our business.
Speaker #3: Mark will take you through the financial results in more detail before I return to discuss outlook and priorities. We'll then open the call for questions.
Speaker #3: FY26 was undoubtedly a disappointing financial year for us. While we completed the transition to our new route-to-market model and delivered the structural benefits we expected, the business experienced greater disruption than anticipated through the transition, and a number of execution challenges that impacted sales performance.
Speaker #3: Revenue declined 14.9% to $118.3 million, and underlying EBITDA declined to $4.3 million. Core brand revenue was down 11.3%, and statutory impact was a loss of $20.3 million.
Speaker #3: Our balance sheet remained sound, with $5.4 million of net cash at June 30, 2026. The result is below what we wanted it to be, but we finished the year with a stronger operating platform and a clear plan for FY27.
Speaker #3: I think it's important to be clear about what drove the result. The first factor was disruption associated with the route-to-market transition, particularly in parts of the pharmacy channel, notably independent pharmacy.
Speaker #3: It has taken longer than expected to transition customers to our preferred ranging and bestsellers list. Second, Dr. Lewin's experienced out-of-stock issues associated with its packaging refresh and supplier consolidation activities, which reduced product availability and limited participation in key promotional programs.
Speaker #3: Third, promotional activity did not generate the level of demand we targeted in a number of categories and brands. And finally, Fusion Health delivered a weaker-than-expected result, reflecting innovation performance, lower rates of sale in health food channels, and disruption in the independent pharmacy channel.
Speaker #3: Importantly, though, we view these as execution and transition issues rather than structural issues with either our categories, our brands, or the operating model itself.
Speaker #3: We've taken definitive steps to address these challenges, and we have made significant investments in inventory to restore supply. We have reshaped our marketing model, and we have significantly increased the size of our innovation funnel.
Speaker #3: We've also continued to invest in the capabilities and people to support our sales and marketing functions. We now have a clear FY27 plan to convert a stronger platform into improved financial performance.
Speaker #3: While FY26 was challenging financially, there were a number of important achievements during the year. Firstly, the route to market transition is now complete. We have transitioned to the pharmacy wholesaler and third-party logistics model, significantly expanding our pharmacy reach, and now have access to more than 4,500 pharmacies across Australia.
Speaker #3: Second, the structural benefits from the new model have been delivered. We realized approximately $2.8 million of EBITDA savings and approximately $5.6 million of EBIT savings during FY26, and that's in line with our expectations.
Speaker #3: Thirdly, our experience with our largest pharmacy wholesaler has been particularly encouraging and gives us a sense of what the model looks like when it is working.
Speaker #3: Sales and volumes with our largest pharmacy wholesaler increased during FY26. Skew ranging was broadly maintained through the transition, and that gives us confidence the model can support growth when executed effectively.
Speaker #3: Fourth, we launched new direct-to-consumer platforms on both Dr. Lewin's and Fusion Health, and continued to strengthen our e-commerce capabilities overall. We also developed enhanced social and creator-led marketing capabilities, refreshed our innovation pipeline, and refinanced our debt facilities to better align with our new operating model.
Speaker #3: Our strategy remains pretty straightforward. At the same time, we've refined it to concentrate our investment behind fewer and bigger opportunities. We believe we can create value by focusing on strong brands in attractive health and beauty categories, building demand through effective marketing and innovation, partnering closely with our customers, and increasingly engaging consumers directly through e-commerce and digital channels.
Speaker #3: During FY26, category growth remained positive across beauty tools, cotton, hair accessories, facial skincare, and vitamins, minerals, and supplements. Our categories remain attractive, but our own performance was below expectations.
Speaker #3: The challenge was the disruption associated with the transition activities, product availability issues in Dr. Lewin's, and the weaker-than-expected performance in Fusion Health. Our objective in FY27 is to close the gap between category growth and our own performance.
Speaker #3: Our three largest brands continue to hold leadership positions in their respective categories. Manicare experienced disruption associated with ranging changes and competitive dynamics in parts of pharmacy, although this was partially offset by growth in grocery and our major pharmacy customer.
Speaker #3: Swisspers was the standout performer during Q4.
Speaker #1: FY 26 , supported by strong grocery execution and improved performance in key pharmacy accounts . Lady Jane was impacted by route to market disruption as well reduced promotional participation and delays in the rollout of the electrical range .
Speaker #1: Across all three brands, we continued investing in innovation, packaging, and brand development initiatives that will support future growth. Dr. Lewins and Infusion Health were the two brands which contributed most significantly to the revenue shortfall in '26.
Speaker #1: These are the two two of the brands where we see the biggest opportunity for growth as they are in particularly large and growing categories for Doctor Lewins , the primary issue was product availability out of stock issues associated with the packaging refresh and supplier consolidation activities .
Speaker #1: Reduced availability and constrained participation in key promotional programmes . While those issues have now been resolved , the impact on customer customer momentum persisted throughout much of FY 26 and constrained our ability to participate in promotional activity for Fusion Health .
Speaker #1: Performance was impacted by weaker than expected innovation outcomes, lower rates of sale in the health food channel, and disruption in the independent pharmacy channel. Despite the FY26 result, we remain confident in the long-term opportunities for both of these brands.
Speaker #1: They operate in very attractive categories. We have strengthened their digital capabilities, and we see significant opportunity to improve execution and build momentum. Thank you.
Speaker #1: I'll hand now to Mark to take you through the financial results Thank you , Brett , and good morning everyone . Starting on slide 14 , I want to frame the FY 26 result with six key messages before stepping through the detail Firstly , FY 26 was a period of transition .
Speaker #1: It was our first full year operating under the new model . Following the transition , we substantially completed by 30 June 25th . The disruption from that transition was greater than we anticipated and combined with executional challenges , had a significant impact on revenue through the period That said , the structural savings from the new operating model were delivered said we expected to unlock four and a half to 5 million of recurring Ebit benefit , and in FY 26 , we realised 5.6 million .
Speaker #1: However , those benefits were more than offset by trading performance with underlying EBITDA of 4.3 million worldwide . Plan . In the second half , we invested in inventory to restore product availability , in particular for the doctor , Lewins brand , and that investment in working capital is the primary driver of the downward movement in our net cash .
Speaker #1: And finally, our debt facilities have been refinanced and right-sized in line with our new operating model, providing access to capital to support our strategic agenda. Turning now to slide 15.
Speaker #1: Group revenue of 118.3 million was down 14.9% , or Core brands account for 14.1 million . Of that decline , down 11.3% , adjusting for new wholesaler rebates and net transitional pipe fuel that is sell into on board our pharmacy wholesalers .
Speaker #1: The underlying decline was 6.1% , and I'll come back to this on the revenue bridge shortly . Portfolio brands were down $6.6 million , or 45.9% , reflecting reduced ANP support and to a lesser extent , supply disruption .
Speaker #1: Reduced AMP on these brands reflects a deliberate reallocation of investment towards our core brands. Our gross margin improved 0.9 percentage points to 58.8%.
Speaker #1: This reflects a favorable mix benefit from core brands , which represented a greater proportion of revenue in FY 26 versus FY 25 , and which carry higher margins .
Speaker #1: This was partially offset by the dilutive impact of new wholesaler rebates moving below gross margin. Distribution costs increased $2.2 million to $7.5 million.
Speaker #1: This reflects the cost of the new triple relationship , partially offset by savings in direct to store delivery costs . Our AMP spend of 20.5 million was down 1.9 million and notwithstanding the decline on prior year , our investment rate was up in part due to the establishment of our new e-commerce platforms and with support reallocated from portfolio brands to core brands .
Speaker #1: Our contribution after AMP or Cap , which largely represents the businesses variable contribution to its fixed cost base , was 41.6 million , down 11.2 million , with cap margin down 2.8 percentage points to 35.2% .
Speaker #1: Low cap . We delivered significant savings Employee costs reduced by 16 , sorry , by 6.8 million , or 21.5% , to 24.9 million , and other expenses reduced by 1.4 million to 12.4 million .
Speaker #1: That is $8.2 million of combined savings, driven principally by the Kingsgrove warehouse exit and the new operating model, supported by disciplined overhead management.
Speaker #1: Taking this together , we delivered underlying EBITDA of 4.3 million , down 41.4% on FY 25 and underlying Ebit of 0.2 million . Underlying Npat was a loss of 0.5 million on slide 16 , we present our segment summary Australia and New Zealand delivered revenue of 115.8 million , down 14.8% , and underlying EBITDA of 9.7 million , down 25% contribution after AMP was 41.4 million .
Speaker #1: The drivers of those already noted for the group , including disruption from the route to market transition , particularly in independent pharmacy . Out of stock issues affecting Doctor Lewins and weaker than expected performance in Fusion Health .
Speaker #1: Our Swiss brand posted modest growth. Trading conditions in the independent pharmacy channel remain challenging across health and beauty, grocery, and one major pharmacy customer did perform more positively for our international segment.
Speaker #1: Revenue of 2.6 million was down 0.7 million , or 16% , driven primarily by Doctor Lewins in China , reflecting ongoing weakness in demand and a slower than anticipated recovery in market activity .
Speaker #1: The international business delivered a positive contribution margin and improved its EBITDA loss position to 1.1 million from 1.6 million , largely through cost management Looking ahead , management has identified a distributor led operating model as the preferred approach for international , with implementation commencing during FY 27 .
Speaker #1: Slide 17 sets out the revenue bridge, and this is the slide that best explains the headline decline. We start with FY25.
Speaker #1: Net sales of 139 million . The first movement 7.1 million captures two route to market impacts . The first is the new wholesaler rebate for warehousing and logistics , which under the new operating model , is recognized as an offset to sales rather than as a cost The second is approximately 4 million of net transitional pipe fuel revenue , weighted to FY 25 , related to the onboarding of pharmacy .
Speaker #1: Neither item reflects underlying consumer demand , adjusting for both gives a comparable FY 25 base of 131.9 million , against which FY 26 revenue declined just over 10% .
Speaker #1: Core brands account for $7.4 million of that, a like-for-like decline of 6.1%. The drivers are customer ranging changes associated with the transition, brand performance, and competitive intensity across parts of the pharmacy channel.
Speaker #1: Our stock challenges primarily affecting Doctor Lewins and weaker than expected innovation performance . This was partially offset by growth in our largest pharmacy wholesaler growth in the grocery channel and growth from our new e-commerce platforms , portfolio brands account for the remaining 6.2 million , down 44% on a like for like basis , reflecting reduced AMP support and some supply disruption Slide 18 now sets out the key movements in underlying EBITDA from 7.3 million in FY 25 to $4.3 million in FY 26 .
Speaker #1: This includes $4.5 million relating to the wholesaler rebates and transitional pipe fill that I've just described for Brand Contribution. After AMP was down $6.4 million.
Speaker #1: This reflects the like-for-like sales reduction of 6.1%, increased distribution costs under three PL model, and an updated AMP assessment rate. The core brand cap is the primary driver of the below expectation.
Speaker #1: EBITDA performance during the year. The impact from portfolio brands was modest at $0.7 million, as the sales decline was largely offset by reduced AMP support.
Speaker #1: FX was favorable at 0.4 million , reflecting a comparatively stronger Aussie against the USD net of our hedge cover , employee costs and other expenses contributed $6.8 million 1.4 million , respectively , and in summary , contribution after AMP was down 11.2 million and 8.2 million of cost savings brought us back to 4.3 million .
Speaker #1: Turning to slide 19. This sets out the structural benefits that the new operating model delivered in its first full year, in February 25.
Speaker #1: We said we expected to unlock incremental Ebit , sorry , incremental underlying Ebit of 4 to 5 million from FY 26 in February 26th .
Speaker #1: We then guided towards the upper end of that range , and in FY 26 , we delivered 5.6 million , taking the components in turn , distribution gains have been made in the pharmacy channel .
Speaker #1: However , as noted , transitional ranging issues in parts of the pharmacy sector have offset these gains . Progress is being made in this area , but I will let Brett cover this in his outline of FY 27 priorities shortly .
Speaker #1: Next, there is a $3.2 million offset to revenue and gross margin, being the wholesaler service charge for warehousing and logistics. Accounting standards require this to be presented as an offset to revenue.
Speaker #1: But in practice it replaces costs we no longer incur further down the PNL distribution is a net 1.7 million cost , comprising 1.7 million of reduced delivery costs from exiting in-house distribution , against 3.4 million for the new three PL services model , employee and other expenses delivered savings of 7.7 million from the exit of warehouse employees and overheads and DNA delivered 2.8 million from the Kingsgrove warehouse exit , just two points to close on this slide .
Speaker #1: First , the fixed cost savings and our permanently in the base employee costs . Other warehouse costs and DNA are all done . Second , we now operate a more variable cost model than we did under the legacy structure , where sales , distribution does not convert .
Speaker #1: There is flex in the wholesaler cost line. That is a significant change from the disproportionately high fixed cost base we carried previously.
Speaker #1: Slide 20 sets out the material items for the year on a pre-tax basis. During FY26, we recognized total material items of $25.6 million before tax.
Speaker #1: The majority of these items are non-cash, with $2.1 million representing cash costs in FY26. The largest component is the $20.7 million impairment of intangible assets.
Speaker #1: This comprises a $15 million goodwill impairment in the ANZ segment and $5.7 million of brand impairments, principally Manicare, Fusion Health, and several smaller brands.
Speaker #1: These impairments reflect a recalibration of growth assumptions based on current trading performance. The second category is $1.6 million of restructuring and transformation costs associated with implementing the new operating model, including IT and project management costs and employee-related transition costs.
Speaker #1: The final category is $3.3 million of other items. This includes $2.3 million of regulatory and legal costs associated with the ASIC proceedings.
Speaker #1: Together with an onerous lease charge on relocation of the corporate office and ERP-related expenditures. These have been partially offset by a small interest benefit associated with an ATO refund.
Speaker #1: Taken together, these material items resulted in a statutory loss after tax of $20.3 million, compared with an underlying impact loss of half a million.
Speaker #1: Turning to cash on Slide 21, the group finished the year with net cash of $4.5 million, down from $8.8 million at 30 June 25th.
Speaker #1: Operating cash flow of 0.7 million , compared with 2.2 million in FY 25 . Npat , adjusted for non-cash items , contributed 6.2 million , but this was offset by a 5.5 million working capital outflow .
Speaker #1: The largest element of which is $6.4 million of inventory investment in the second half. To restore product availability and support service levels, working capital also reflects the payment of restructuring costs.
Speaker #1: In July 25th, partially offset by timing benefit on customer receipts and payments. Payments for PA and intangibles of $1.3 million relate to point of sale assets and capitalized IT product development costs.
Speaker #1: Lease payments were $2.9 million, and we spent $0.8 million on the on-market buyback. We were undrawn on our facilities at 30th June 2026.
Speaker #1: Finally , slide 22 summarizes our actions taken with regard to capital management . And there are four key points . Firstly , we refinanced our debt facilities during the year , rightsizing them to support the new operating model .
Speaker #1: Secondly , we invested in inventory to restore product availability and support service levels . Thirdly , the board has determined not to pay a final dividend , reflecting the retained loss balance at 30 June 26th and the FY 26 loss after tax .
Speaker #1: And finally , we initiated our on market buyback , reflecting the board's continued confidence in the long term strategy . I will now hand back to Brett to take us through the FY 27 priorities and outlook Thanks , Mark .
Speaker #1: As we enter FY27, our focus is very straightforward. Our task is to convert the stronger platform we've built into improved commercial outcomes.
Speaker #1: And we have five very clear priorities. First, strengthen customer engagement through deeper joint business development planning with our key customers. Second, optimise ranging and increase wholesale SKU availability, and rebuild distribution around our best sellers list.
Speaker #1: Third , accelerating growth through impactful consumer marketing , leveraging the social and creative capabilities developed during the latter part of FY 26 . Fourth , increasing the launch frequency and effectiveness of our innovation pipeline supported by sustained brand investment .
Speaker #1: And finally , increased investment in e-commerce across both owned platforms and marketplace channels While FY 26 was disappointing , we now have a lower cost operating model , improved product availability , expanded pharmacy reach , and much stronger digital and marketing capabilities .
Speaker #1: Naturally , commercial recovery lags the operational recovery , and this is the gap we are looking to close quickly . Our focus in FY 27 is execution and growth , and we believe the actions taken over the past 12 months have strengthened the foundations of the business and positioned us to capture the benefits of our expanded distribution footprint over time Finally , while the subdued sales in FY , sorry , in the fourth quarter of 26 continued into July , with the benefit of the new operating model , management's priorities for FY 27 and a disciplined approach to cost management company is focused on delivering underlying EBITDA growth for the full year .
Speaker #1: Thank you. And now we'll open the line up for questions. We've actually got some questions that have already come in, which we might cover.
Speaker #1: I think
Speaker #2: Thank you. Yes. If you wish to ask a question via the phone, you will need to press the star key, followed by the number one, on your telephone keypad.
Speaker #2: And if you wish to ask a question via the webcast, please enter it into the 'Ask a Question' box. We'll pause a moment for any further questions to register, and we'll address your webcast questions.
Speaker #2: Your first question comes from Josephine Ng from the University of Melbourne, who asks, has MCP considered divesting one of their lower-performing brands to focus on the core ones where they see greater growth?
Speaker #2: Instead ?
Speaker #1: Yeah , it's a great question , and that was I'd probably point to the transformation that we've been through over the last two years or so When we started this journey , we had about 16 brands under under the portfolio , and we've really rationalised them back to the ones that we believe in .
Speaker #1: And strategically, we believe these five brands are the brands that we should really focus on. I think it's easy to kind of think about, should we divest them?
Speaker #1: But these brands have significant consumer franchise in the marketplace. They have good distribution and they're well presented in our customers, and our job.
Speaker #1: Despite last year's performance , which is transitory , we still very much believe in the five brands we've got at the core of our of our strategy .
Speaker #2: Thank you . Your next question comes from David Wiley , from JP Morgan , who asks with net cash at end FY 26 being 4.5 mil .
Speaker #2: And the provision of $2 million is in place for the upcoming orders by the court, and a soft July 2026. What is the actual net cash today?
Speaker #2: When are the court orders to be made regarding the ASIC fine?
Speaker #1: Yeah , great . Thanks for the question . It's Mark . I think I'll answer the first one and I'll let Brett answer the second .
Speaker #1: So net cash for point five at the end of FY 26 is correct . The two mil provision . What I'll say is that that's that's non-cash in nature .
Speaker #1: It's a it's a provision so that I can say that that is not impacting cash at this point in time . We're not we're not going to go out or sort of give updates on on cash on a monthly basis , but just given that you've mentioned the soft July 2026 , what I would be comfortable saying is that at the end of July , we did remain in a net cash position , but I don't think I can give too much more than that in terms of the timing of when we believe ASIC will be finding the penalty .
Speaker #1: That's that's really up to the court . And , you know , we're still working through our options and considering the judgment would be the position .
Speaker #2: Thank you. Another question from David Wiley, who asks: With international revenue at $2.6 million for FY26, what is the inflection point where this actually isn't costing shareholders money?
Speaker #2: And contributing to Npat
Speaker #1: Yeah . Thanks . It's Mark again . I'll start here too . I think one one thing to note on the international business , which we've we've provided a little bit more information on in the presentation is , is the contribution of the international business .
Speaker #1: So it's actually got a positive contribution to the fixed cost base overall for the business today . It's small , about $200,000 , but it is it is providing contribution .
Speaker #1: If we were to exit those fixed cost base elements which sit below, that would still sit in the business. So, the inflection point is about here—where we are today.
Speaker #1: But that doesn't mean that that's that we're necessarily satisfied with that . And I might pass over to Brett to to answer the rest of it Yeah .
Speaker #1: I think the international business is , is a focus for us in FY 27 to really start to move into the distributor model that we've outlined , we feel as though our brands do .
Speaker #1: We have, you know, opportunities in marketplaces such as China and Europe with some of our customers that are expanding in those areas.
Speaker #1: And we feel as though with a with a model that is that is focused on keeping the OpEx low and , you know , kind of distributing it from Australia .
Speaker #1: We feel as though that's a much more sustainable model that will start to turn profitable quickly.
Speaker #2: Thank you . Another question from Josephine Ng , who asks reported revenue was down 14.9% versus a 10.1% like for like decline after adjusting for wholesaler rebates and pipe fill .
Speaker #2: Should we now consider those RTM transition impacts fully reflected in the FY26 base, or will there be further distortion in FY27?
Speaker #3: If you . I think it's a it's a good question . What I'd say is that the . The vast majority of those roots market impacts are reflected in FY 26 .
Speaker #3: It's been one of the key reasons for the challenging year that we've had.
Speaker #1: But some of the . The impacts that we've called out as well are transitional . So one example would be the ranging changes , the ranging impacts .
Speaker #1: It will take some time for us to , to , to fully resolve that . We're making improvements and gains have been made even in recent months .
Speaker #1: With respect to that . So we won't say that that's been fully completed . But but progress , good progress is being made on that .
Speaker #1: The second example would be the marketing model. So a lot of effort has gone into revising and adjusting our approach to driving marketing in the market.
Speaker #1: And again, that will take a little bit of time to come through and be reflected in financial performance.
Speaker #2: Thank you. Andrew Gracey from Deep River Funds asks, have you taken costs from the business for 2027, given the sales revenue base is now lower?
Speaker #2: If so, what is the cost reduction? Quantum.
Speaker #1: Hi , Andy . Well , FY 2027 is really only just started . I mean , look , we're always looking at our cost base .
Speaker #1: I mean, there are a number of initiatives that we're looking at, particularly around the ERP, as an example, which will help us to reduce our cost base.
Speaker #1: But generally , we we're always assessing what we're doing with costs . I mean , we're still fairly early in this year and we are looking , you know , for for sales to recover pretty quickly .
Speaker #1: But I don't think we're in a position where we're , you know , wholesale slashing , you know , the cost base . I think we've done a fair bit of that over the last year .
Speaker #1: And we're trying to get the the model to settle That said , the big next cost piece that we'd look at is the ERP , which , you know , we spend a significant amount .
Speaker #1: Keeping our current ERP alive with consultants and a whole bunch of other costs. And we've started to identify, you know, exactly where we're headed in that territory.
Speaker #1: And there will be—there is—cost reductions, both from the cost of the tech, as well as potentially opex around that as well.
Speaker #2: Thank you. Your next question is from John Burgess from I Research, who asks: Is the current working capital to revenue indicative of the likely medium-term ratio?
Speaker #1: Yeah . Thanks , John . I think it's fair for us to say that it's it's probably not . It's a little it's a little higher than we would ordinarily like .
Speaker #1: But that was a conscious decision by us to invest in inventory to support service stock availability and service rates through wholesale and retail.
Speaker #1: So it is high . If you were to go back and look at the actual amount of stock that we've got at the moment versus our our cost of sales , you'll come up with a fairly large number around about six months worth of stock .
Speaker #1: So that's definitely not what we're targeting . Our ambition is , is significantly lower than that . But we just need to be careful as well and make sure that we do that in an orderly and managed way .
Speaker #1: And take a disciplined approach to managing that inventory through 2027. Yep.
Speaker #2: Thank you. Your next question is from a private investor, and they ask: Could you tell us what is happening with the shares MCP bought back?
Speaker #2: Why are they not cancelled? A lot of companies are doing buybacks and announce their cancellation of shares from time to time.
Speaker #1: Yeah , I mean , all all shares that we bought back have been cancelled with ASIC as per the Corporations Act . However , under the ASX listing rule , shares aren't recorded as cancelled until after the time the board determines the end of the buyback .
Speaker #1: So it's kind of they are cancelled in with ASIC but not with the ASX . We have bought back , you know , almost 5 million shares for just over $800,000 .
Speaker #1: And I think that's probably the main reason why you haven't seen it, is that you're not seeing it on the ASX. But they have been cancelled with ASIC.
Speaker #2: Thank you. Another question from Josephine from University of Melbourne, who asks: You noted that subdued Q4 trading continued into July. Can you give any color on whether August has shown improvement, and which brands or channels are driving the current weakness?
Speaker #1: I think I'd probably give a general comment on that . I mean , one of the things that we're pleased with at the moment is definitely our largest wholesaler is , has got the largest range of SKUs and has probably the most mature in terms of the model being embedded .
Speaker #1: And they're trading very , very well . We're very happy with that . We're seeing good , good trading from the grocers as well .
Speaker #1: And largely , we're very comfortable with whilst they're only small , our e-commerce activities , including launching a number of platforms on Amazon , they're all looking very positive for us Our issue is largely in independent pharmacy and that comes back to embedding the model more effectively .
Speaker #1: So , you know , our scan is looking broadly positive in trend wise . Trending up now that we're getting availability up from an August perspective , we're still pretty early .
Speaker #1: We still really haven't gotten to the end of August, so I kind of don't really want to speak to that. But July has kind of continued.
Speaker #1: The , the trend out of the last quarter of last year , but I will say the new marketing model that the team have put in place is incredibly exciting for us .
Speaker #1: And that's really only kicked off in the last 2 or 3 weeks , two , 3 or 4 weeks . And there's a there's a significant amount of work being done with the independent pharmacy channel and , and API and Symbion to expand distribution .
Speaker #1: So they're all the things that give us comfort that we're headed in the right direction.
Speaker #2: Thank you. Your next question is from David Wiley from JP Morgan, who asks: What is the status of cancelling the shares?
Speaker #2: McPherson's has bought back ? Will the buyback continue given a substantial cash , cash position ? Does Macpherson have ample headroom on their balance sheet to absorb any further operational or sales disruptions
Speaker #1: Yeah . Look , in terms of the buyback , the board is continuing to buy . We're comfortable that it sends the signal that we've got belief in our long term strategy .
Speaker #1: And you know, at the moment, our position is that the buyback is continuing and we're comfortable with where it's at, cash wise and strategy wise.
Speaker #2: Thank you. Your next question is from John Burgess, who asks, do you expect further FX benefits to COGS in FY27?
Speaker #1: Yeah . Hi , John . It's Mark here again . It's a good question Look , we're not we're not guiding on FX .
Speaker #1: What I will say is we've got some benefits this year . They were quite , you know , relatively modest . Our average FX rate was 66 , which was inclusive of our hedging .
Speaker #1: And that was up versus 63 last year . This year , just the way that pricing in the market currency markets is working I would expect that to be a little favourable , a little bit more favourable .
Speaker #1: But not, not, not in a material way that would materially impact the result. So, yeah.
Speaker #2: Thank you . Your next question is from Andrew Gracie from deep River funds , who asks stock shortages , shortages appear to be a fundamental issue .
Speaker #2: Can you give us some background as to why we had shortages?
Speaker #1: Yeah, two for Doctor Lewis is the example. There was the changing of our supplier base to rationalise, rationalising it back combined with some changes in packaging.
Speaker #1: Just the collision of those two things together really just caused a degree of complexity that made it , that made it difficult . Where we are past that now .
Speaker #1: And Doctor Lewins is fully stocked . All of its brands , all of its SKUs , have changed over to largely to , to the new packaging .
Speaker #1: And so from a stock perspective , in our warehouse , that complexity is now finished . I think the other out of stocks were broadly arranged around understanding how wholesalers order their stock and at times the run rate out of the wholesaler was going faster than , you know , we were we were putting it in and they were ordering it .
Speaker #1: And so we've also largely resolved those issues now, and those wholesalers have enough stock to be able to carry the SKU increases.
Speaker #1: The skew and scan increases that were happening—so we largely resolved those issues by buying more stock and having it in our warehouse.
Speaker #1: And so that we could work with wholesalers to restock them more, you know, just faster. And so it was more just a transition from one model to the next.
Speaker #1: And that, largely, those issues are behind us. Andy.
Speaker #2: Thank you. You have another question from David Wiley, who asks: What is the current status with your asset clearing?
Speaker #1: Well , we expect to announce the . Thank you . Thank you for that . Questions . Good one . We expect to announce the court's order shortly When they're made , we .
Speaker #1: That will be this month . We expect these will . These will confirm the judgment . And we're currently considering the judgment before any next steps .
Speaker #1: No next steps are scheduled, so it's kind of in flux with the courts at the moment. But it is moving.
Speaker #2: Thank you. There are no further questions at this time. I'll now hand back to Brett Charlton for any closing remarks.
Speaker #1: Thank you , everybody for your questions . Are I'd just like to confirm that , you know , we're we're very focused on execution and growth as a team .
Speaker #1: We feel confident that the model has settled, and we've now got the right amount of stock in the marketplace to be able to make sure that we don't have any more out-of-stocks.
Speaker #1: Our marketing model has been reset . We're very happy with where our largest pharmacy customer and our largest wholesaler are at , and broadly , we're working , you know , in the digital space and the innovation space to make sure that the company delivers this year .
Speaker #1: And I thank you all for your ongoing support.
