Bouncing Baby Bunting confirms dominant position in the specialist baby goods

Business grows in fiscal 2020 and boss ‘confident that growth will continue in 2021’.

Baby Bunting was slated to announce for 2020 total sales of about $405m, representing growth of about 12 per cent. Picture: MATT THOMPSON

Shares in infant clothing, homewares and equipment retailer Baby Bunting bounced more than 11 per cent after it confirmed its dominant position in the specialist baby goods sector by forecasting full-year net profit to rise by as much as 35 per cent as its twin engines of store sales and online sales powered up.

In a trading update on Wednesday, Baby Bunting said it expected pro-forma earnings before interest, tax, depreciation and amortisation for fiscal 2020 of between $33m and $34m, reflecting growth of between 22 per cent to 25 per cent.

Pro-forma net profit after tax for the year of between $18.5m and $19.5m would see growth of between 29 per cent and 35 per cent but still below previous guidance of profit as high as $22m. Statutory net profit after tax would be between $9.5m to $10.5m, from $11.6m in 2019.

The earnings update was upbeat compared with its more cautious trading update in March, when the coronavirus pandemic first took hold in Australia, and represented an acceleration of its strong store and online sales in guidance provided to the market in May.

Baby Bunting shares lifted more than 11 per cent on the profit forecast and later closed up 35c, or 11.11 per cent, at $3.50. They have more than doubled from lows of just over $1.50 in March.

Chief executive Matt Spencer said these were positive results given the pandemic.

“During the year, all of our stores remained open and our team worked incredibly hard to adapt how we operated to ensure that we continue to support new and expectant parents in these challenging times.

“We have seen the business continue to grow in fiscal 2020 and I am confident that growth will continue in 2021.”

He said Baby Bunting was slated to announce for 2020 total sales of about $405m, representing growth of about 12 per cent.

Comparable store sales growth in the second half was 10.5 per cent, with full-year comparable store sales growth of 4.9 per cent.

Comparable store sales growth from Baby Bunting’s bricks and mortar stores was 2.5 per cent for the year and 7.6 per cent in the second half, while online sales grew 39 per cent, making up 14.5 per cent of total sales for the year — up from 11.8 per cent last year.