Sibling rivalry strikes Baby Bunting profits
BABY Bunting has again downgraded is full-year profit forecast, saying “unprecedented” liquidation sales launched by key rivals have hurt its earnings.
The baby goods retailer yesterday said it now expected earnings before interest, tax, depreciation and amortisation to come it at $18 million to $20 million this financial year.
Baby Bunting had originally told investors it expected to generate earnings of $25.3 million to $27 million for the year to June but cut that forecast to $23 million late in November.
The latest downgrade
comes after key competitors Baby Bounce and Baby Savings collapsed and launched fire sales that have resulted in “unprecedented” discounting and stock clearance.
“Baby Bunting’s sales and gross margin performance has been adversely affected both in the lead up to and
since these competitors entered administration,” Baby Bunting said in a statement yesterday.
Like-for-like sales — which strip out the effect of shops opening and closing — shrunk 2.5 per cent in the first six weeks of the retailer’s fourth quarter, it said.
That marks a turnaround from the 4.7 per cent growth in sales it posted in the third quarter.
Year-to-date total sales remain 13.1 per cent higher than for the same period a year earlier.
“What we have seen in the industry during this financial year in terms of the extent of consolidation is unprecedented,” chief executive Matt Spencer said.
“While challenging in the short term, these changes in market conditions present some great opportunities for the growth of Baby Bunting’s business and profitability in 2019 financial year and beyond.”
The update from Baby Bunting was delivered as new figures showed retail spending was flat in March, a result that was below market expectations of a 0.2 per cent increase.
Retail spending was $26.4 billion in the month, seasonally adjusted, according to the Australian Bureau of Statistics.
It was up 0.2 per cent to $78.2 billion in the first three months of the year.
Discretionary spending was a drag, with department store sales down 0.5 per cent in March, cafes, takeaways, and restaurants, down 0.8 per cent, and household goods falling 0.3 per cent.
Clothing and footwear was down 0.2 per cent.