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Baby Bunting share price jumps after reporting strong growth despite COVID-19

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The Baby Bunting Group Ltd (ASX: BBN) share price has jumped higher following the release of its preliminary unaudited full year results.

In morning trade the baby products retailer’s shares are up 6% to $3.33.

How did Baby Bunting perform in FY 2020?

Baby Bunting was a strong performer in FY 2020 despite the disruption caused by the pandemic in the second half.

According to the release, Baby Bunting delivered total sales of approximately $405 million in FY 2020 This represents growth of around 12% and was driven by very strong second-half comparable store sales growth.

Comparable stores sales grew 10.5% during the second half, lifting full year comparable store sales growth to 4.9%. This was largely the result of its online business, with comparable store sales growth from its bricks and mortar stores coming in at 2.5% for the year.

Online sales (including click & collect) grew 39% during the year and now make up 14.5% of total sales.

In respect to earnings, Baby Bunting expects to report pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) of between $33 million and $34 million. This represents growth of between 22% to 25% on FY 2019’s EBITDA result.

On the bottom line, the retailer is expecting to report pro forma net profit after tax of between $18.5 million and $19.5 million. This will be year on year growth of between 29% and 35%.

On a statutory basis, Baby Bunting expects a net profit after tax of between $9.5 million to $10.5 million. This will be down from $11.6 million a year earlier.

This statutory result includes the non-cash impact of employee equity incentive expenses, significant transformation project expenses, and the impairment of the carrying value of its investment in its digital commerce technologies. Pro forma EBITDA also excludes the impact of AASB 16 lease accounting.

“Very positive results”.

Baby Bunting’s CEO and Managing Director, Matt Spencer, was pleased with the company’s performance during these challenging times.

He said: “These are very positive results, in particular given the impact of the COVID-19 pandemic on communities in Australia. During the year, all of our stores remained open and our Team worked incredibly hard to adapt how we operated to ensure that we continue to support new and expectant parents in these challenging times. We have seen the business continue to grow in FY20 and I am confident that growth will continue in FY21.”

“As the ongoing restrictions in Melbourne and surrounding areas indicate, COVID-19 is likely to have an impact into FY21 in ways that may be unexpected. I am confident that our business can respond to new challenges as we did in the second half of FY20. To date, trading in FY21 has continued to be positive,” he added.

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