Baby Bunting Group Ltd (BBN) FY18 Profit Drops 29% On Competitor Closures
Baby Bunting Group Ltd (ASX: BBN) will be watched closely by investors today after the baby products company reported its financial results for the year ended 30 June 2018.
Baby Bunting Group is the leading baby product retailer in Australia with almost 50 stores across the country.
Here are some of the highlights from Baby Bunting Group’s report:
- Revenue up 9% to $303.1 million
- Same-store sales (SSS) growth was flat year over year
- Gross profit was up 5.9%
- Underlying EBITDA down 18.9% to $18.6 million (click here to learn what EBITDA means)
- Net profit down 29.1% to $8.7 million
- Annual dividends per share down 26% to 5.3 cents
According to Bloomberg, analysts were expecting Baby Bunting Group to report a profit of $9.9 million. A dividend of 5.6 cents was also expected.
Baby Bunting’s ‘underlying’ net profit, which excludes employee share incentive expenses, was $9.6 million, so the retailer appears to have missed analyst guidance.
Baby Bunting management pointed the finger at competitors, such as Toys R Us, for the drop in profit.
Baby Bunting CEO and Managing Director Matt Spencer said: “In unprecedented times, Baby Bunting’s top 4 speciality baby goods competitors all entered external administration resulting in significant price deflation as a result of distressed retailing.”
The baby product retailer has been working on growing its private label and exclusive product ranges which represented 23% of sales in the second half of the year. Total online sales grew 63% and made up 9.5% of sales.
The company reported that in the first six weeks of FY19 it had achieved total sales growth of 16.5% and comparable sales growth of 9.8%, suggesting a better year ahead.
Shareholders would hope so, considering the Baby Bunting share price has fallen 43% since reporting season in 2016.
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