Blackmores' shares shed as much as $13 of their value on Wednesday after the vitamins and supplements powerhouse revealed that shifting channels into the all-important Chinese market had crunched its sales and profit.
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Shares fell more than 11 per cent to $103 after Blackmores handed down its half-year results, before recovering slightly and then sliding steadily to end the day down 10 per cent at $104.
The company said it recorded $158 million in local sales in the last six months of 2016, down 31 per cent on the same period in 2015.
At the same time Blackmores has started selling directly to customers in China, a business that grew 92 per cent to $64 million in the half.
The result reflects a shift from relying on "daigou" shoppers, who buy desirable products in Australia and ship them to China, to trading in China directly.
Blackmores chief executive Christine Holgate said "China-influenced" sales in Australia had fallen about 50 per cent to $45 million in the first half.
She said Blackmores products were regularly selling in Chinese stores for twice the price as in Australia a year ago, but that price gap had since narrowed, eroding the appeal of using daigous.
"The huge margins that people were making, some of that has stabilised," she said.
"Secondly people were buying up stock and then probably had too much stock, and that's why you saw softer sales in the first quarter, not just for Blackmores, but for many other companies."
Ms Holgate said she was pleased second-quarter sales had returned to modest year-on-year growth.
Infant formula products developed with Bega Cheese were growing, Blackmores said, but had been hit by the regulatory changes and volatile market in China that had affected other formula makers like Bellamy's.
Blackmore's would "continue to review this business to ensure we have the right structure in place for the future", it said.
The company forecast that its full-year results will be below last year's profit, but above that of 2015.
Morningstar stock analyst Chris Kellos said the question was now where the waning influence of Chinese consumer on local sales would stabilise and how Blackmores will move to a direct sale model.
"We think the brand is very strong, and we think they have an opportunity to transition or migrate that demand onto direct channels," he said. "Just how fast that happens really depends on a number of factors, including primary policy coming out of China on imports."
Across the business total revenue was down 5.7 per cent on the same half last financial year, while net profit fell 41 per cent to $28.4 million.
Blackmores will pay a $1.30 interim dividend on March 22, down from $2 last year.
