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Baby Bunting now shipping to NZ

Baby Bunting has started shipping to customers in New Zealand from its Australian website, the specialty retailer said in a recent earnings update.

Baby Bunting already has a significant share of the Australian market (around 30 per cent according to reports), due to the collapse of rival chains, including Babies R Us, in recent years. Now it is expanding its digital presence to New Zealand.

Baby Bunting expects EBITDA to be between A$33 million and A$34 million in FY20, a 22-25 per cent increase on the previous year, thanks to an increase in total sales and a higher gross profit margin despite the impact of bushfires and Covid-19 in the second half.

In a release of the specialty retailer’s unaudited full-year results on Wednesday, CEO Matt Spencer said they were “very positive”.

Unlike many retailers, Baby Bunting was less impacted by the drop in discretionary spending amid the global coronavirus pandemic, which drove unemployment to record highs and consumer sentiment to record lows in recent months.

Its target customer – expectant parents – still needed to buy car seats, cots, clothes and other baby supplies, even if they were no longer going out to eat in restaurants or going to the gym.

Baby Bunting kept its stores open throughout the lockdown, but adapted the way it operated, according to Spencer.

One area where this is visible is in online sales, which grew 39 per cent in FY20, faster than total sales at 12 per cent, according to the retailer’s unaudited results. Online sales including click and collect made up 14.5 per cent of total sales in the year, up from 11.8 per cent in FY19.

Total sales for the year are expected to be approximately A$405 million, with comparable store sales growth of 4.9 per cent. Comp sales growth was 10.5 per cent in the second half. For bricks-and-mortar stores alone, comp sales growth was 2.5 per cent for the year and 7.6 per cent in the second half.

Gross profit margin is expected to be 36.2 per cent, an increase of 120 basis points against the prior corresponding period.

Net profit after tax is expected to be between A$18.5 million and A$19.5 million, an increase of 29-35 per cent.

Both the NPAT and EBITDA figures exclude certain costs, such as the non-cash impact of employee equity incentives, significant transformation project expenses and the impairment of the carrying value of the company’s investment in digital commerce technologies. The EBITDA figure also excludes the impact of AASB 16 lease accounting.

Statutory NPAT is expected to be between A$9.5 million and A$10.5 million.

Baby Bunting finished the year with zero debt and A$13 million in cash.

While the recent return to lockdown in Melbourne suggests uncertainty will continue in FY21, trading has been positive so far, according to Spencer.

“We have seen the business continue to grow in FY20 and I am confident that growth will continue in FY21,” he said.

A new store is set to open at Westfield Knox in Melbourne, with more stores planned for NSW.

The retailer is also working on a new distribution centre in Dandenong South, which will double its capacity. This is expected to be operational in Q4.

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