The Baby Bunting Group Ltd (ASX: BBN) share price is up 11% in response to its FY19 result.
Baby Bunting is a retailer that specialises in baby goods with over 6,000 lines such as prams, cots, car safety equipment, toys, feeding and other accessories. It was started in Melbourne in 1979 and now the company has over 50 stores in Australia with plans to grow the store count beyond 80 over the next few years. It currently employs over 700 people.
Baby Bunting’s Booming FY19 Result
The retailer revealed that revenue rose by 21% to $368 million, with comparable sales growth of 8.7%. Baby Bunting has benefited from the closure of some of its competitors over the past couple of years. Online sales grew by 46% and now represents 11.8% of total sales.
Over the 2019 financial year the Baby Bunting gross profit margin increased by 1.9% (190 basis points) to 35%. This was driven by new product range improvements and improved importation arrangements with supplier partners. It was also supported by the growth of private label and exclusive products, which finished the year at 27.6% of total pro forma sales, which was an increase of 56.5%.
Baby Bunting’s EBITDA (click here to learn what EBITDA means) rose by 37.4% to $24.1 million and net profit after tax (NPAT) rose 43.3% to $12.4 million. Baby Bunting said that it achieved results higher than its pro forma EBITDA guidance.
Baby Bunting Dividend
The Baby Bunting Board boosted the total year dividend by 58.5% to 8.4 cents per share, which is a strong increase by a retailer.
Baby Bunting Management Comments
Baby Bunting CEO and Managing Director Matt Spencer said: “I am very proud of our performance for the year. We have had an excellent year that has consolidated our position as the go to destination for baby goods in Australia.”
Is The Baby Bunting Share Price A Buy?
Baby Bunting has guided that its underlying profit will grow by between 32.4% to 45.7% to a range of $20 million to $22 million.
This would be a strong result by the retailer and I can see why investors would want to get hold of shares if it delivers on this guidance. But, retail is a tough business and I’m trying to avoid retail businesses in my portfolio these days. That’s why I like the idea of one of the reliable businesses in the free report below instead of Baby Bunting.
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