Baby Bunting falters amid collapsing competition

Baby Bunting1Baby Bunting Group has seen net profit after tax fall to $8.7 million, a drop of 29 per cent year-over-year.

The ‘one-stop’ baby-shop’s gross margin was impacted by price deflation, decreasing from 34.3 per cent in FY17 to 33.3 per cent.

“The past financial year has seen Baby Bunting strengthen and consolidate its market leading position as the largest specialty baby goods retailer in Australia,” said Matt Spencer, CEO and managing director.

“In unprecedented times, Baby Bunting’s top four speciality baby goods competitors all entered external administration resulting in significant price deflation as a result of distressed retailing. Despite this, Baby Bunting was still able to grow sales and transaction volumes within the difficult trading environment.”

The company opened five new stores during the year and, following the public collapse of Toys R Us and Babies R Us, is reviewing further opportunities that may become available.

The company noted that its sales from private label and exclusive products grew 100 per cent, with 20.9 per cent of total sales coming from this category.

Online sales grew by 63 per cent, and made up almost 10 per cent of total sales, with the company finding online sales in a relevant catchment increasing whenever a store was opened in the area.

Looking forward, the company expects growth of 30 per cent to 45 per cent, with EBITDA in the range of $24 million to $27 million, assuming gross margin exceeds 34 per cent, comparable store sales growth to range in the mid to high single digits, and with the opening of six new stores opening.

Shareholders were buoyed by the positive outlook, shooting the retailer’s share price up over 28 per cent in early trading on Friday morning.

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