Australian retailer Baby Bunting has reported a sales slip of 3.4 per cent for FY24, hitting $498.4 million for the full year.
Baby Bunting sells a wide range of goods for babies, including babywear.
Amid the $17 million fall in sales in FY24, gross profit has also fallen by 56 basis points to 36.8 per cent, with net profit down $10.8 million to $3.7 million.
Baby Bunting cited challenging trading conditions and cost of living pressures faced by consumers for the overall sales fall, but highlighted that the group has seen improvement in its sales performance trajectory since May.
In the first seven weeks of FY25, total sales were up 3.5 per cent, with comparable store sales hitting positive growth of 2 per cent following a 0.7 per cent fall from May to June this year, and a 5.6 per cent fall in the second half.
The group also reported that it is on track to achieve a targeted 40 per cent gross profit margin in FY25, driven by key supplier trading terms renegotiations which have materially progressed through June-July
July 2024 gross profit margin is up 180 basis points compared to last year, reportedly driven by simplified pricing architecture and removal of Loyalty Spend & Earn in Q4 FY24.
“While it is still early days, it is pleasing to see the implementation of the strategic growth initiatives that we announced as part of our Investor Day in June 2024 starting to deliver positive momentum in our trading and financial performance,” Baby Bunting CEO Mark Teperson said.
“Of note has been the improvement in trajectory of our comparable store sales since May, reflecting the change in our go-to-market strategy and the 180-basis points improvement in our Gross Profit Margin achieved in July 2024 following simplification of elements of our pricing structure.
“We remain focused on continuing to implement our strategy and maintaining the positive momentum achieved over the past three months.
“Our key priorities for the rest of the financial year are completion of trading terms renegotiations with our key suppliers, which is progressing well, redesign of our store format due to be launched in market end of Q3, the phased roll-out of new stores and refurbishments in 2H FY25 and continuing the progress we have made to date on range innovation and exclusive brand offerings.”
Looking ahead, the group expects FY25 pro forma net profit after tax to be in the range of $9.5 million to $12.5 million. This is based on the expectation that comparable store sales growth hits between 0 per cent and 3 per cent, full-year gross profit margin hits 40 per cent, cost of doing business increases and capital expenditure hitting between $10 million and $13 million, fully funded from operating cash flow.
“Baby Bunting is Australia’s leading specialty retailer with a market leading omni-channel ecosystem comprised of 70 omni-channel stores in Australia and four in New Zealand,” Teperson said. “We enjoy an 85% unaided brand awareness rate with over 800,000 active loyalty customers generating over 90% of our sales.
“We operate in a large addressable market with enormous potential to grow our share in the $3.4 billion soft goods market where we are currently underrepresented with around a 3% market share.
“We have hit the ground running in implementing the strategy we announced in June which is designed to deliver sustainable top line revenue growth, enhance our gross margins, fund our strategic growth from operating cashflows and create shareholder value. We are making good progress in implementing our strategy and it is pleasing to see our initiatives already delivering demonstrable improvement in our performance.”