Baby Bunting Feels the Pressure

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By Published On: May 14, 20240 Comments

Baby Bunting has sunset its Spend & Earn loyalty programme promotion as it continues to battle costs amid dwindling sales.

On May 9, Baby Bunting provided a sales update, including second half results up to the end of April. Sales remain down for the baby goods retailer, declining 7.7 percent in H2. 

Back in February, Baby Bunting CEO, Mark Teperson said the company would be focusing on trade, productivity, and customer experience, in the second half.

“Our first half update shows that while conditions have remained challenging, we are beginning to see improvements in operations and performance from changes we have introduced into the business reflecting our focus on trade, productivity and customer experience,” he had stated at the time. 

According to the company, through March and April, investments were made in price which fell short of expectations in terms of sales and performance. Net debt as at the end of April is in line with the same time last year, and inventory is running at around $10 million below the prior year (with four new stores having opened in 1H FY24).

The trend of improving comparable store sales has softened over recent trading months, which Teperson says reflects the ongoing cost-of-living pressures being experienced by new parents with young families.

“Baby Bunting remains focused on providing great value to customers. We’re acutely aware that our customers are more sensitive than many other groups to the widespread cost-of-living pressures and are managing their spending carefully” Baby Bunting’s CEO, Mark Teperson said. 

“While we have seen an improving trend in transactions in 2H compared to 1H, this was heavily impacted by a declining average transaction value driven by consumers trading down and ongoing competition in nursery essentials impacting market price.” 

The Group has said the rest of the second half will continue to be a transition period. All stores are now enabled for online fulfilment, resulting in lower freight costs due to fewer split orders. 

Baby Bunting’s loyalty program’s Spend & Earn element was discontinued in March with the full margin benefit of that change expected to be seen from mid-May.

Gross margin year-to-date is 36.9 percent, and FY24 pro forma NPAT is now expected to be in the range of $2 million to $4 million. 

“Our focus on customer experience and simplification of the business continues. We continue to look for opportunities to align the cost profile with the Group’s sales trajectory and future growth plans.” 

The Group will provide an update on FY24 trading, the Group’s initiatives into FY25 and its strategy for FY25 and beyond at the end of June.

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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