This ASX All Ords stock is crashing 20% on a disappointing update

The cost of living crisis is weighing on this retailer's performance.

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The Baby Bunting Group Ltd (ASX: BBN) share price is having a very tough time on Thursday.

In morning trade, the ASX All Ords stock was down as much as 20% at one stage.

The baby products retailer's shares have recovered a touch since then but remain down 17% at the time of writing.

Why is this ASX All Ords stock crashing today?

Investors have been flooding to the exits today after the company released a disappointing trading update.

According to the release, the trend of improving comparable store sales that was seen in the first half has softened over the last two months. Management believes this reflects the ongoing cost-of-living pressures being experienced by new parents with young families.

Baby Bunting advised that through March and April, investments were made in price which fell short of expectations in terms of sales and performance.

This ultimately has led to its gross margin year-to-date easing to 36.9%. This is down from 37.2% during the first half.

On the bottom line, the company's FY 2024 pro forma net profit after tax is now expected to be in the range of just $2 million to $4 million. This includes a loss of approximately $1.2 million associated with the extended closure and remediation of the Cairns store.

This will be a sizeable decline on FY 2023's net profit after tax of $14.5 million, which itself was down 51% on FY 2022's numbers.

Commenting on the underperformance, the ASX All Ords stock's CEO, Mark Teperson, said:

Baby Bunting remains focused on providing great value to customers. We're acutely aware that our customers are more sensitive than many other groups to the widespread cost-of-living pressures and are managing their spending carefully.

While we have seen an improving trend in transactions in 2H compared to 1H, this was heavily impacted by a declining average transaction value driven by consumers trading down and ongoing competition in nursery essentials impacting market price.

What's next?

The company advised that the second half remains a transition period as it builds toward FY 2025.

All stores are now enabled for online fulfilment, which has delivered lower freight costs (due to fewer split orders), better utilisation of inventory, and lower pick costs through April.

In addition, its revised go-to-market promotional strategy is showing positive trends in active customers and transaction volumes.

Teperson concludes:

Our focus on customer experience and simplification of the business continues. We continue to look for opportunities to align the cost profile with the Group's sales trajectory and future growth plans.

In late June, the ASX All Ords stock plans to provide a further update on FY 2024 trading, its initiatives into FY 2025, and its strategy for the year ahead and beyond.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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