Baby Bunting shares tumble following trading update

Baby Bunting’s trading update posted this morning revealed that as at 4 June 2023 , total sales growth is around 1 percent and comparable store sales growth is negative 3 percent. Baby Bunting expects FY23 sales to be in range of $509 million to $513 million and comparable store sales to be negative 4 to negative 5 percent.

Net profit after tax is now expected to be in the range of $13.5 million to $15.0 million for FY23. A significantly lower range than previous guidance of NPAT in the range of $21.5 million to $24 million. Expected full year gross margin ranges from 38 to 39 percent. The Company now anticipates that the full year gross margin performance will be moderately below the bottom end of that range.

A key profit driver, Baby Bunting’s Storktake promotional event resulted in sales ‘well below expectations’. The update reveals that sales have been unprecedentedly low, with comparable store sales of around negative 21 percent.

Upon the release of the update, Baby Bunting Group shares dropped more than 20 percent to a five-year low. As of this morning 6 June, shares were down 22 percent at $1.385, a level that was last hit in June 2018.

Last year, full year sales sat at $507.3 million, its highest sales result. NPAT was $19.5 million. The company had a good year in 2022 due to a digital transformation and an updated store network plan.

A silver lining for the company, Baby Bunting’s long awaited Marketplace initiative has successfully launched and the Company is now activating the initial third-party seller SKUs on its website. The company is expecting to have 2,000 third-party SKUs available online by the end of the financial year in July.

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