By Stephen Wright

WELLINGTON, New Zealand--Infant formula marketing company a2 Milk Co. lowered its annual earnings forecast for the fourth time since September as the pandemic continues to crush sales via Chinese surrogate shoppers.

The company also said the chief executive of its Asia-Pacific division, Peter Nathan, has resigned and it has started a review of its business, in particular its reliance on daigou--surrogate shopping--sales.

"The board recognises that the company needs to change its approach and is commencing a comprehensive process to review its growth strategy," it said.

A2 Milk's share price dropped nearly 20% early Monday. It has slumped by 70% since August last year, wiping more than 11 billion New Zealand dollars ($8.0 billion) from the company's market value. Before the slide, a2 Milk was one of the largest companies by capitalization in New Zealand's share market despite its reliance on the opaque daigou trade.

A2 Milk forecast a profit margin of 11% to 12% for its 2021 fiscal year, down from the 24%-26% it forecast at its third earnings downgrade on Feb. 25.

The substantial reduction partly reflects an estimated NZ$80 million to NZ$90 million of new provisions against profits for excess inventory.

The company said the amount of inventory in the daigou system was larger than it had anticipated when it laid plans earlier in the financial year for a recovery from the pandemic-driven disruption to sales.

It expects full-year revenue of between NZ$1.2 billion and NZ$1.3 billion, down from NZ$1.4 billion forecast in February.

The company had about NZ$775 million of cash at the end of 2020. It said Monday it is considering options for returning capital to shareholders, including a share buy back.

Write to Stephen Wright at stephen.wright@wsj.com

(END) Dow Jones Newswires

05-09-21 1847ET