Growing Baby Bunting enjoys impressive revenue bounce
BABY Bunting is poised to bolster its dominance of the $2.4 billion baby goods industry after enjoying strongerthan-expected sales.
Its store expansion and the collapse of rival My Baby Warehouse in December have helped drive its growth and cement its position as the biggest speciality infant goods retailer in Australia.
Strong sales of prams, car seats and nappies also contributed to 38 per cent profit growth in the year to June 26, to $8.33 million.
Revenue rose 31 per cent to $237 million, beating the upgraded guidance it issued in February of $225 million to $235 million. Same-store sales jumped 12.5 per cent.
On top of strong demand for nappies and clothing, a growing trend of owning more than one pram was partly behind the strong sales, chief executive Matt Spencer said.
“They may have one in their house, the grandparents may have one and they may keep an umbrella-style stroller in their boot for quick trips,” he said.
Baby Bunting debuted on the share market last October, and wants to more than double its current network of 36 stores to 80, with plans to add four to eight stores a year and push into new markets such as the Gold Coast.
Among its competitors is Baby Bounce, which acquired some of the My Baby Warehouse stores, and discount department store retailers Kmart, Target and Big W.
A string of other speciality baby product retailers have gone into administration, including PramWarehouse and Mothercare Australia, which both now run only online businesses in Australia.
Mr Spencer said Baby Bunting, founded in 1979, had been strategic with its expansion, growing organically and not from acquisitions.
“We are clear about our store format size and who our customers are and we are clear about investment to support growth,” he said.
The group’s strong sales momentum has continued into the current financial year, with same-store sales up 15 per cent.
It expects sales growth to ease compared to the strong performance of 2015-16, and has forecast earnings before interest, tax, depreciation and amortisation to be $21.5 million to $24.5 million in 2016-17, a rise of between 15 per cent and 31 per cent.
Shares in Baby Bunting soared by almost 11 per cent on the release of its earnings report, and closed at a record high of $3.06, up 22¢, or 7.75 per cent.