Motley Fool Australia

Why the Baby Bunting share price is up 26% in August

hands throwing smiling baby up in the air representing rising baby bunting share price
Image source: Getty Images

The Baby Bunting Group Ltd (ASX: BBN) share price has gained 26.4% so far in August. That’s compares to a 2.8% gain from the All Ordinaries Index (ASX: XAO) over the same period. In late morning trading today, the company’s shares are up 5.8% from Friday’s close while the All Ords is down 0.7%

Year to date, the Baby Bunting share price is up 35%, giving the company a market capitalisation of $561 million at the current price of $4.40 per share.

That gain masks the gut wrenching, 60% decline seen by the Baby Bunting share price during the COVID-19 driven sell off from 13 February through to 19 March. But investors who held on — or were lucky enough to buy at the low — were handsomely rewarded. Baby Bunting’s share price has gained a stellar 188% since the company’s 19 March low.

What does Baby Bunting do?

Baby Bunting was established in Melbourne in 1979 as a family-owned business. The company began trading on the ASX in October 2015. Today it’s ranked as Australia’s largest specialty nursery retailer and one-stop baby shop.

Baby Bunting currently has 56 stores across Australia. These offer a broad selection of prams, car seats, cots, nursery furniture, high chairs, bathing and feeding accessories, toys, and of course babywear.

Why is the Baby Bunting share price up 26% in August?

Baby Bunting has been a strong performer all year, with the notable exception of the viral sell-off in the February/March bear market.

The company’s ability to shift much of its sales to its online platform demonstrates the value in adaptability during times of change and immense uncertainty.

This was confirmed when Baby Bunting released its full year results on Friday. The company reported an 11.8% increase in total sales, which reached $405.2 million. Online sales growth was an impressive 39.1%, with online sales reaching 14.5% of total sales over the 12-month period.

Baby Bunting also opened 5 new stores during the financial year, reporting comparable store sales growth of 4.9%. It also confirmed its plans to open 4 to 6 new stores over the coming year.

The company declared a final, fully-franked dividend of 6.4 cents per share, bringing its full year dividend to 10.5 cents per share.

With its success in growing online sales and plans for store expansions, I think the Baby Bunting share price will be one to watch moving forward.

These 3 stocks could be the next big movers in 2020

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

*Returns as of 6/8/2020

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Related Articles...