What has happened to the Baby Bunting (ASX:BBN) share price this year?

It’s been a volatile year so far for the Aussie nursery retailer. We take a closer look

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The share price of ASX infant products retailer Baby Bunting Group Ltd (ASX:BBN) has been a solid performer so far this year.

The company’s shares have risen by about 12% in 2021, increasing from $4.84 to $5.32 at the time of writing.

However, just looking at the year-to-date movement in shares doesn’t tell the full story. The Baby Bunting share price has been volatile in 2021, with lockdowns in various parts of the country continuing to cause disruptions.

Company background

Baby Bunting is a leading Australian nursery retailer, stocking a wide range of baby and infant products.

It has grown from a single store in suburban Melbourne in the 1970s to become a major national brand. It now has at least 50 superstores located across the country and more than 700 employees.

Recent financials

Baby Bunting recently released its FY21 full-year results on 13 August. The company reported a 15.6% year-on-year jump in total sales (to $468.4 million). In addition, proforma net profit after tax (NPAT) surged 34.8% higher (to $26 million).

The result was underpinned by strong growth in online sales, which helped to offset some of the disruptions caused by lockdowns. Online sales grew by 54.4%, and made up 19.4% of total sales for the year.

After the results were released, the Baby Bunting share price sunk 10%.

Baby Bunting didn’t provide any firm outlook for FY22, citing continued uncertainty around the trajectory of the COVID-19 pandemic. Despite this, Baby Bunting CEO and managing director Matt Spencer struck an upbeat tone on the company’s near-term outlook.

He stated: “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.”

Movement in the Baby Bunting share price

Despite these reassurances from the company, the Baby Bunting share price fell sharply following the release of its full-year results. Shares are now down about 10% since its results were announced.

This continues a downward trend in the Baby Bunting share price that started back in late April. After surging to a new 52-week high of $6.65 on 26 April 2021, it has now fallen by 20%.

Today, Baby Bunting shares are changing hands for $5.32 — down 1.39% on yesterday’s closing price.

While the shift towards online sales in FY21 is a positive trend, lockdowns and social restrictions are still hurting retailers.

As an example, Baby Bunting reported comparable-store sales as of 12 August 2021 (a day prior to the company’s results release) was down 6.4% year-to-date. This could be a reflection of the strict lockdown restrictions still imposed across Australia’s two most populous cities.

Shareholders will be hoping for some good news on lockdown restrictions easing – and that this might arrest the fall in the Baby Bunting share price.

Motley Fool contributor Rhys Brock owns shares of Baby Bunting. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Baby Bunting. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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