Australian retailer Baby Bunting has reported a statutory net profit after tax of $9.9 million, down 49.5% on the prior year. On a pro forma basis, NPAT was $14.5 million, down 51.0% on the prior 52-week period.
The company’s pro forma earnings before interest, tax, depreciation and amortisation was $31.2 million, down 38.2% on the prior 52-week period.
Despite the profit slump, Baby Bunting’s total sales were up 1.7% on FY22 to $515.8 million. Comparable store sales were down 3.6% from 5% recorded in FY22, with online sales of $103.0 million now representing 20.0% of total sales.
Baby Bunting’s gross margin was 37.4%, with the company noting that this improved through the second half. Drivers of the margin improvement included the significant reduction in international shipping rates, domestic freight efficiencies, new ranges of private label products and changes to the loyalty program introduced towards the end of the first half.
Costs of doing business were up $16.5 million against the prior corresponding period, with the key contributors being new and annualising stores, cost inflation (including wage inflation) and one-off establishment costs associated with Baby Bunting’s newly launched marketplace and its initial expansion into New Zealand in 2023.
The company launched its Baby Bunting Marketplace in June, 2023. The marketplace enables third-party sellers to sell a curated range of products on babybunting.com.au. It now has more than 5,000 SKUs available and plans to finish FY24 with 20,000 SKUs from 150 retail partners.
The baby retailer also opened its first store in Albany, Auckland in August 2022 and claimed it is now run rating at A$4.5 million in annualised sales with positive earnings contribution through the second half. Three new stores are anticipated to open in FY24, in Sylvia Park, Manukau and Christchurch.
“We have continued to grow market share and experienced positive sales growth despite the increasing macroeconomic factors impacting the retail sector,” Baby Bunting’s acting CEO Darin Hoekman said.
“While our category is less discretionary, our customers are not immune to cost-of-living pressures and we experienced sales decline towards the end of the year as consumer spending slowed.
“We have a great range of products at entry-level pricing and beyond, which means we can provide great value to help our customers lower the costs of parenting.”
Hoekman said the company has moved to focus on lowering its CODB and managing working capital to align to sales and the ongoing uncertainty around the trading environment.
“We are holding the right levels of inventory with minimal seasonal and clearance stock,” he said. “Our net debt is modest and we have plenty of headroom in our banking facility. We have taken steps in July to reduce overheads and to manage cost inflation in stores and in our supply chain.
“We will continue to invest for growth and our store network expansion will continue in FY24.”