Baby Bunting has reported its first half results for FY23 and the infant goods retailer has suffered as customers return to pre-pandemic shopping patterns.
Baby Bunting has reported its first half results for the half year ended 26 December 2022. The omnichannel retailer reportedly told investors in January that higher business costs and softer-than-expected sales at the end of last year would lead to a decline in profits for the half.
According to the report, statutory net profit after tax was $2.7 million, down 67 percent on the same time last year when Baby Bunting reached a profit of $8.1 million. Gross profit margin finished the half at 37.2 percent which was down 212 basis points on the prior corresponding period. The cost of doing business (on a pro forma basis) was 32.4 percent, an increase of 222 basis points.
The company states that this was a consequence of several factors including, supply chain cost increases, rapidly increasing domestic transport costs, better than expected engagement with the recently launched loyalty program and the impacts of the contraction of the play gear category.
Baby Bunting stayed open throughout the pandemic with Click & Collect a key tool for its success. Touchless Click & Collect has fallen in the first half by 30.2 percent but it is still significantly up by around 225 percent over a 3-year period.
“Consumer staples, which are more widely available across general retail, saw a decline of 4.7 percent,” said Baby Bunting’s CEO and Managing Director, Matt Spencer. “Baby Bunting grew total sales by 6.6 percent in the period, continuing our strategy of growing market share. Over the last 3 years, our sales have grown 36.7 percent noting that all Baby Bunting stores remained open during the COVID period. As life has normalised, the market share gains made through COVID have predominantly been held onto.”
“Post-COVID, our product segment performance is normalising. Nursery essentials – being a core category – continue to grow strongly and were up 12.7 percent in the half (over three years, this category is up 39.4 percent). Consumer staples, which are more widely available across general retail, saw a decline of 4.7 percent. Play time items (including Play gear) declined 3.6 percent in the half, reflecting price deflation and reduced demand after the pandemic.”
The day the results were released on Friday, Baby Bunting also announced the departure of long-serving CEO and Managing Director Matt Spencer, who will finish at the end of the year. “It has been incredibly humbling to be part of the Baby Bunting team over the past 11 years,” said Spencer. “I have loved coming to work each and every day. People make the difference real and I believe we’ve assembled a great team at Baby Bunting. I am confident in the future of the Company in the hands of a very experienced and well-respected leadership team.”
According to the company, Baby Bunting’s strategy remains unchanged, with a focus on growing market share from its core business, investing in digital, growing in new markets and profit margin improvement. Looking to the year ahead, Baby Bunting Marketplace presents a significant revenue opportunity, and is on track to launch in Q4 FY23 with plans to launch with 1,000 additional products. Gross profit percentage for January is in line with the Company’s recovery plans and up on the prior year. For FY23, Baby Bunting expects pro forma net profit after tax to be in the range of $21.5 million to $24 million and full year gross profit margin to be between 38 percent to 39 percent.
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