Trans-Tasman retailer Baby Bunting’s first-half profit fell 59 per cent as sales dampened in December, preliminary unaudited financial results show.
The company has reported that during the half year to December 31, sales grew 6.6 per cent to $254.9 million, however tax-paid profit fell from $12.5 million to $5.1 million year on year.
CEO & MD, Matt Spencer, attributed the first half profit decline to a combination of lower gross profit margin and softer than anticipated sales in December. The company also incurred costs ahead of new store openings in New Zealand, where a second store is on track to open within the next five months, with 10 planned longer term.
“Baby Bunting’s strategy is to grow market share and we grew total sales by 6.6 per cent for the first half of FY23, with comparable store sales being [up by] 0.4 per cent. Positive comparable store sales growth was achieved despite cycling the significant growth in sales of 16.1 per cent in Q2 in the prior year as Victoria and NSW emerged from significant periods of lockdown.”
He said the company’s core nursery categories which are less discretionary – such as car safety, prams and feeding – continued to perform well through the half and “are an important part of Baby Bunting’s future growth and differentiates us from others in the market”.
Last October, the company cited economic uncertainty, inflationary pressures and other global challenges after its first-quarter performance failed to meet expectations.
Looking forward, Spencer said the gross profit margin deficit improved between the first and second quarters after the company implemented a recovery plan which is expected to further deliver benefits in the second half of the fiscal year. He predicts a full-year gross profit margin of between 38 and 39 per cent, higher than in the second half of last year.
“During this period, we continued to invest in the business to support future growth as we work towards our long-term store network target of 120 stores in Australia and New Zealand and our digital strategy to grow market share.”
In Australia, new stores were opened at Burnside and Chirnside Park in Victoria, Hornsby in NSW and Hectorville in SA, and another at Ringwood, Victoria, was relocated to the Eastland Shopping Centre. The first New Zealand store opened at Albany. During the second half, new stores are scheduled for Christchurch (NZ), Orange in NSW and Loganholme, Queensland.
Half-year statutory results will be released on February 17, but for now, the company is predicting a tax-paid, full-year profit in the range of $21.5 to $24 million.
