Baby Bunting tanks on consumer spending warning

The baby products retailer is warning of impacts from the downturn in consumer spending as new parents pull back on purchases.

Baby Bunting, the retailer that sells baby and infant goods from nappies to prams, has posted a 49.5 per cent slide in full-year net profit to $9.9m as the pressure on household budgets forces many parents to pull back on spending.

And that pressure has continued into the new financial year, with Baby Bunting reporting sharp sales declines since July.

Baby Bunting shares fell 9 per cent on the results, but later recovered to close 1.9 per cent lower at $2.09.

Baby Bunting, which reported its full-year results on Friday, revealed that total sales growth for the last six weeks of trade was down 4 per cent and comparable store sales down 9 per cent. These results are cycling 19.3 per cent and 15.3 per cent growth in the prior corresponding period.

Baby Bunting shares are down 56 per cent over the past 12 months as it faces a severe downturn in trading driven partly by the pullback in consumer sentiment and spending as well as its own goals around pricing and ­inventory.

Baby Bunting said pro forma profit for the year of $14.5m was down 51 per cent – in line with a profit warning in June that provided guidance of $13.5m-$15m for 2023.

Revenue for 2023 was up 3.4 per cent at $524.3m. The dividend was slashed by more than half to 4.8c a share, payable on September 8.

Baby Bunting – which has 70 stores in Australia and one in New Zealand – also conceded that a key stocktake promotional event had failed to find traction with shoppers, with trading in stores and online well below expectations during the campaign.

Acting Baby Bunting chief executive Darin Hoekman said the brand had continued to lift market share and experienced positive sales growth despite the increasing macroeconomic factors affecting the retail sector.

But conditions had worsened towards the end of fiscal 2023.

“While our category is less discretionary, our customers are not immune to cost-of-living pressures and we experienced sales decline towards the end of the year as consumer spending slowed,” he said.

“At a business level, we have moved to focus on lowering our cost of doing business and managing our working capital to align to sales and the ongoing uncertainty around the trading environment.

“We are holding the right levels of inventory with minimal seasonal and clearance stock.”

Baby Bunting has appointed former Afterpay executive Mark Teperson as its new chief executive. He starts from October 2.