Baby Bunting (ASX:BBN) share price on watch after very strong Q1 sales growth

The Baby Bunting Group Ltd (ASX:BBN) share price will be on watch today after the release of a trading update ahead of its AGM…

| More on:
hands throwing smiling baby up in the air representing rising asx share price

Image source: Getty Images

The Baby Bunting Group Ltd (ASX: BBN) share price will be on watch on Tuesday after the release of a trading update ahead of its annual general meeting.

How is Baby Bunting performing?

When Baby Bunting released its full year results in August, it revealed that its comparable store sales growth for the first six weeks of FY 2021 was 20%.

Pleasingly, this morning the company revealed that this strong form has continued into October.

According to its update, Baby Bunting’s financial year to date comparable store sales growth to 2 October was 17%. These figures include its stores in the Melbourne metropolitan region, which have been impacted by lockdowns.

Excluding these stores, Baby Bunting’s comparable store sales growth would have been an impressive 28.5% over the same period.

A key driver of this growth has been the company’s online business. During the first quarter of FY 2021, Baby Bunting’s online sales (including click and collect) were up 126% on the prior corresponding period. Excluding the Victoria region, online sales growth was 92% during the first quarter.

Click and collect has proven to be increasingly popular with consumers in FY 2021. Management advised that click and collect sales grew 233% during the first three months of the financial year.

The positives don’t stop there. The company’s gross margin has continued to widen in FY 2021. At the end of the first quarter, Baby Bunting’s gross margin stood at 37.5%. This compares to a gross margin of 36.2% in FY 2020.

One potential negative is that COVID-19 has impacted the company’s operating costs.

It commented: “We have also seen an increase in COVID-19 related costs, whether that be direct costs such as cleaning and general operating costs. But there has also been increased costs due to channel switching and impacts on the supply chain in relation to freight, storage and handling.”

However, it chose not to quantify this statement, so investors may need to wait until its half year results in February to see where its operating margins stand.

In line with the outlook given with its full year results in August, Baby Bunting expects to open 4 to 6 new stores in FY 2021. Though, no full year earnings guidance has been provided due to the uncertain operating environment.

These 3 stocks could be the next big movers in 2021

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 15/2/2021

Motley Fool contributor James Mickleboro 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.

More on Share Market News

Top 10 asx shares today
Share Market News

Here are the top 10 ASX shares today

Here are your top 10 biggest gainers in the ASX 200 on Tuesday.

Read more »

Piggy bank rocketing.
52-Week Highs

3 ASX All Ordinaries shares smashing multi-year highs on Tuesday

Let's take a closer look.

Read more »

Man holding different Australian dollar notes.
Bank Shares

3 reasons this broker thinks the NAB share price is great value

NAB shares could be great value according to Goldman Sachs...

Read more »

ANZ ASX 200 banks capital return Group of investors madly grabbing for cash on city street.
Capital Raising

Chalice share price remains frozen despite capital raise update

Chalice is seeking to bolster its balance sheet to fund its exploration activities.

Read more »

Red arrow going down, symbolising a falling share price.
Share Fallers

Why Nufarm, Sayona Mining, Tabcorp, and TechnologyOne shares are falling

These ASX shares are in the red on Tuesday. Some more than others...

Read more »

Share Gainers

The Lynas share price has surged 15% in 2 weeks. What’s the deal?

Investors continue driving up the Lynas share price in May.

Read more »

A graphic showing a businessman running up a white upwards rising arrow symbolising the soaring Magellan share price today
Share Gainers

Why Allkem, NAB, Pushpay, and Virgin Money UK shares are rising

These ASX shares are pushing higher today...

Read more »

A man working in the stock exchange.
Share Market News

Here are the 3 most traded ASX 200 shares on Tuesday

We take a look at the most traded ASX 200 shares by volume today.

Read more »