Baby Bunting lifts sales, profit after category shake-up

Baby Bunting has delivered strong sales and profit growth in the first half of FY19, despite the major shake-up in the category following the of Toys ‘R’ Us and Babies ‘R’ Us at the start of the fiscal year.

The brand expanded its store count to 52 stores, increased online sales by 61 per cent to account for 11.5 per cent of sales and focused on strong market share growth in the half.

As a result, net profit after tax for the period grew 27.8 per cent to $5.2 million, based off of a strong total sales result of $177.7 million – a 17.2 per cent increase on the prior corresponding period.

“As a team, we developed a plan to capture market share, stabilise gross margin and invest in our business to support the future growth opportunity,” Baby Bunting chief executive Matt Spencer said.

“With great focus, we have achieved what we needed to do, and at the end of the half we have seen strong market share growth and a recovery in gross margins back to levels that support our ongoing growth strategy.”

Click-and-collect sales grew 97 per cent in the period, and in areas where the service is offered, click-and-collect now represents 47 per cent of sales in that area.

Private label and exclusive products made up 25.3 per cent of total sales, up from 18.4 in the prior corresponding period, and the group is now targeting such products to make up 50 per cent of total sales in the long term.

Trading up to 14 February, Baby Bunting has seen comparable store sales growth of 8.7 per cent, and total sales growth of 17.9 per cent.

Looking at the remainder of the financial year, the group is expecting FY19 EBITDA to reach $25 to $27 million – growth of approximately 34 to 45 per cent year over year.

This figure assumes gross margin to be approximately 35 per cent, comparable store sales growth to be mid to high single digits, and for a total of six new stores to have been opened in the year; with five having already been opened in the first half.

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