The Baby Bunting Group Ltd (ASX: BBN) share price is having a day to forget on Tuesday.
In morning trade, the baby products retailer's shares are down 25% to $1.34.
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Why is the Baby Bunting share price crashing into the red?
Investors have been hitting the sell button on Tuesday after Baby Bunting released a worrying trading update.
According to the release, sales have been "unprecedentedly low" since the launch of a new promotional event.
As of 4 June, financial year to date, Baby Bunting's sales are down 3% on a comparable store basis and up 1% overall.
However, since the launch of its end of financial year Storktake promotional event, trading both in stores and online has been well below expectations. So much so, comparable store sales are down 21% during the event compared to the same period last year.
This is bad news because this final month of the year has a big impact on its performance for the full year.
As a result, management has warned that if this sales trend continues, its sales will be in the range of $509 million to $513 million in FY 2023, with comparable stores sales down 4% to 5% year over year.
This is expected to lead to pro forma net profit after tax in the range of $13.5 million to $15 million for FY 2023, which is down sharply on its previous guidance range of $21.5 million to $24 million. It will also mean a decline of 49% to 54% year over year.
In addition, management revealed that its recent performance means it will now hit the bottom end of its gross margin guidance range of 38% to 39%, as well as end the period with inventory of $100 million.
Investors will be hoping that this sales trend doesn't continue into FY 2024. Though, judging by the Baby Bunting share price performance today, it seems that many aren't sticking around to find out if that will be the case.
