At the time of writing, the baby products retailer’s shares are down 10% to $5.40.
Baby Bunting share price sinks despite reporting strong profit growth in FY 2021
- Total sales up 15.6% to $468.4 million
- Comparable store sales growth of 11.3%
- Online sales up 54.2% and now represent 19.2% of total sales
- Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) up 29.2% to $43.5 million
- Pro forma net profit after tax increased 34.8% to $26 million
- Fully franked final dividend of 8.3 cents per share (full year dividend up 34.1% to 14.1 cents)
- FY 2022 same stores sales down 6.4% as of 12 August
What happened in FY 2021 for Baby Bunting?
The Baby Bunting share price is under pressure today after a strong performance in FY 2021 was overshadowed by a soft start to the new financial year.
In respect to the former, for the 12 months ended 30 June, Baby Bunting reported a 15.6% increase in total sales to $468.4 million. This was driven by strong comparable store and online sales. The latter was underpinned by the increasing popularity of Click & Collect with consumers. Click & Collect sales more than doubled and now account for 57% of online sales.
Also supporting its sales growth were its Private Label and Exclusive Products sales. They increased 31.1% to become 41.4% of total sales. Management believes this trend will continue and expects to soon achieve its long term target of 50% of sales coming from this category.
On the bottom line, the company’s pro forma net profit after tax was up 34.8% to $26 million. This was underpinned by gross margin expansion and operating leverage. It is also worth noting that this was achieved without any JobKeeper payments or rent relief.
What did management say?
Baby Bunting’s CEO & Managing Director, Matt Spencer, was very pleased with the company’s performance in FY 2021.
He said: “We have had a tremendous year delivering great growth, both in earnings per share and returns for shareholders. This could not have been achieved without the outstanding efforts of the entire Baby Bunting team. Our team has remained focused on being there for new and expectant parents in uncertain times and supporting them with great service and products to meet their essential needs.”
“Baby Bunting is Australia’s leading maternity and baby goods retailer, and we operate in a less discretionary category with around 300,000 births a year in Australia. Our brand has gone from strength to strength and is now the most recognisable brand in this category and this is converting into stronger brand preference and engagement. As we expand our network of stores and our range and services, we expect our growth to continue.”
What’s next for Baby Bunting?
Weighing heavily on the Baby Bunting share price today was its subdued start to the new financial year.
Comparable store sales as of 12 August were down 6.4% financial year-to-date.
Though, this weakness may be offset a touch with store openings. The company anticipates opening three new stores in the first half. It also has a strong pipeline of leases committed for the second half, plus two in New Zealand.
Matt Spencer concluded: “While the new financial year has started with some disruptions from ongoing lockdowns, our experience has been that any short-term sales impact is recovered quickly once lockdowns have eased. While FY22 may have more surprises, our operating strength in our category and our transformation plans should see us well placed in the period ahead.”
The Baby Bunting share price is still up 11% in 2021 despite today’s decline.