The Blackmores Limited (ASX: BKL) share price has come under heavy selling pressure again on Tuesday.
In late morning trade the health supplements company's shares are down 3.5% to $91.12.
What happened?
Investors have been hitting the sell button this morning after Blackmores announced the resignation of its chief executive officer.
According to the release, Richard Henfrey has tendered his resignation from the role he has held for just 18 months after replacing Christine Holgate.
Blackmores has advised that Mr Henfrey will remain in the position whilst the board undertakes the search for a new CEO.
Chairman Brent Wallace said: "I would like to thank Richard for his service and leadership of the Group over the last 18 months and for his strong commitment to Blackmores, the industry and our stakeholders over his decade long tenure."
Before adding: "He has played a pivotal role in the growth of Blackmores and in the industry of complementary medicine overall. I am confident Richard will lead the transition period well, backed by our strong executive management team."
No reason has been given for the surprise departure but, given the company's underperformance over the last couple of years, I can't say this news is entirely unexpected.
I felt that Blackmores' first half result was one of the most underwhelming results during earnings season. For those that missed it, Blackmores delivered flat profits in the first half and warned that it does "not expect the second half profit performance to be ahead of the first half result."
This is largely down to weak sales in the China market. So far in the third quarter, sales in the key market have been impacted by the changing ways that consumers purchase its products, higher inventory levels, and softening consumer sentiment.
Which is the complete opposite to A2 Milk Company Ltd (ASX: A2M) which continues to grow its sales and profits at an impressive rate in China.
Should you buy the dip?
Despite the sharp share price decline in 2019, Blackmores' shares are still changing hands at around 22x earnings. At this level I don't think they offer a compelling enough risk/reward given its poor performance and today's resignation.
In light of this, I would suggest investors avoid them and consider fellow export-focused companies A2 Milk Company and Treasury Wine Estates Ltd (ASX: TWE) instead.
