Baby Bunting’s profits plunge 59 percent after weak December

Specialist baby goods retailer Baby Bunting has blamed weaker-than-expected sales in the key trading period in December for a 59 percent slump in half-year profits.

In a statement to the ASX on Monday, the company posted revenue growth of 6.6 percent for half to $254.9 million, but net income after tax was $5.1 million, compared with 12, $5 million last year.

Baby Bunting said December sales were

Baby Bunting said December sales were “weaker than expected.” Credit:Louie Douvis

CEO Matt Spencer pointed out in October that Baby Bunting’s gross margin declined in the first quarter of 2023 for a number of reasons, including the shift of more products to the “everyday low price” policy and higher input costs such as rising freight rates.

The group’s loyalty program had also impacted margins in the first quarter, as customers redeemed rewards at a higher percentage than the company had anticipated. The company has since adjusted the terms of its loyalty program.

On Monday, Spencer told investors that cutting international shipping rates would improve margins in the second half of the year.

However, he noted that the company’s overall half-year results were impacted by “the combination of a lower gross profit margin for the half-year and weaker-than-expected sales in December.”

The company said in its ASX filing that the group’s second quarter revenue growth was “below Baby Bunting’s expectations towards the end of the quarter.”

Spencer said must-have baby items continued to do well over half.

“Our core nursery categories, which are less haphazard, like car safety, strollers and feeding, have continued to do well in the half and are an important part of Baby Bunting’s future growth,” he said.

https://www.smh.com.au/business/companies/baby-bunting-profits-slump-59-per-cent-after-weak-december-20230116-p5ccpt.html?ref=rss&utm_medium=rss&utm_source=rss_business Baby Bunting’s profits plunge 59 percent after weak December

Brian Lowry

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