Shares in health tracker manufacturer Fitbug (FITB:AIM) crash 30% to 0.5p after the £1.9 million cap admits its business strategy has failed, resulting in its pre-tax loss widening from £3.8 million to £6.3 million in 2015.
With the stock now trading significantly below its November 2014 peak of 17p, its glory days look well and truly over.
A year and a half ago, the future of the microcap looked extremely promising after it won a raft of contracts with big retailers such as Sainsbury’s (SBRY) and Amazon (AMZN).
Unfortunately, Fitbug hasn’t been able to stand out in the extremely crowded and fiercely competitive fitness tracker market. Revenues almost halved from £2.3 million to £1.3 million in 2015 and the company says its direct consumer retail focus has ‘failed to deliver the commercial results anticipated’.
Fitbug has implemented a turnaround strategy which focuses on the business-to-business market. It says 2016 has started well, with first quarter sales in the corporate wellness sector significantly higher than the previous year.
Chief executive Anna Gudmundson, who took over the reins in August 2015, says her vision is to reposition the company into a ‘software as a service provider in the health and wellness technology space’.
Before this happens Fitbug needs to sort out its debt and raise enough money to support its funding requirements.
The company is considering another equity fundraise after raising £1.66 million in August. It has also agreed a further loan of £121,000 from a lender in order to meet its short-term working capital requirements.
