Infant goods retailer Baby Bunting has suffered a 67 per cent plunge in profits as costs hit its bottom line, with the company flagging that it has also seen a drop in comparable store sales at the start of this year.
The group told investors on Friday morning that it’s facing challenges as customers return to pre-pandemic shopping patterns, and click-and-collect orders which saw a sugar rush during lockdowns were down by 30.2 per cent for the half.
Long-time Baby Bunting CEO Matt Spencer will depart at the end of the year.Credit:Wayne Taylor
The company also announced on Friday that long-serving chief executive Matt Spencer will exit his role towards the end of this year, leaving the business on a search for its next boss.
Shares tumbled at the open, with the stock down 9 per cent to $2.24 at 10:05am.
Baby Bunting had told investors back 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 six months to December.
The company revealed on Friday that its net profits after tax had come in at $2.7 million, a 67 per cent decline on the same time last year, when Baby Bunting achieved profits of $8.1 million.
Total sales came in 6.6 per cent stronger during the half, but comparable store sales were ahead just 0.4 per cent during the year.
Comparable store sales were weaker in the first six weeks of this calendar year, down 2.1 per cent up to February 16.
Baby Bunting said comparable store sales growth was down at the start of the year. Credit:Fairfax Photographic
The re-opening of shopping centres across Australia hit the company in some product areas, with shoppers able to go to other stores like discount department operators Kmart and Target for essentials like nappies and baby wear.
“Consumer staples, which are more widely available across general retail, saw a decline of 4.7 per cent. Play time items (including Play gear) declined 3.6 per cent in the half, reflecting price deflation and reduced demand after the pandemic,” Spencer said.
Rising business costs eroded Baby Bunting’s bottom line for the half, with store expenses jumping from $47.7 million during the same time last year to $53.8 million this year, while warehousing expenses accelerated from $4.4 million to $5.9 million.
Spencer told analysts that despite the challenging conditions, the group’s core strategy had not changed and the business was continuing to roll out new stores this year.
The company is working towards launching a retail marketplace in the last quarter of this year, which it says represents a “significant revenue opportunity”.
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