Australian retailer Baby Bunting has recorded a sales decline of 2.5% in the first half of FY24 compared to the first half of FY23.
This is a drop of $6.4 million to $248.5 million, with its gross profit remaining flat against the prior year at 37.2%.
Baby Bunting sells a range of baby products, including clothing and manchester.
Chief executive Mark Teperson said the company had made changes to its marketing tactics in the second quarter, which helped lift overall sales from -3.3% in the first quarter to -1.8%.
These changes include marketing cost reductions from the elimination of catalogues, which were reinvested in digital and social marketing.
“This revised approach has correlated with growth in new customer acquisition, which was 6.6% in Q2 compared to minus 8.4% in Q1,” Teperson said. “This improvement has been a key driver in sales impacts.
Teperson said trends in sales growth as turning, with comparable store sales moving from negative 8.8% in Q1 to negative 5.3% in Q2.
“Over the last nine weeks, which corresponds with the launch date of changes made to our go-to-market messaging and includes the Black Friday promotional events and the Boxing Day sale event, comparable store sales have been around positive 1% year-on-year with positive transactional growth in consumer staple categories negating the price compression experienced in some categories.”
Teperson confirmed an inventory reduction program is underway on less productive ranging, with inventory finishing $14 million below December 2022. This is notwithstanding an increase of six new stores during that time, including three sites in New Zealand.
“In these environments, the two lead categories of car seats and prams, are an area of competitive focus,” he said. “While we believe that we have increased our volume share in both categories, there has been a sales impact of around $6 million because of increased price competition.”
At the end of the half, Baby Bunting had 70 stores in Australia and four in New Zealand. A decision was made to close its Camperdown store in December at the end of its lease, noting an inability to agree a reasonable rent for that site.
This is expected to deliver a cost-benefit of around $1 million in the second half.
“Our first half update shows that while conditions have remained challenging, we are beginning to see improvements in operations and performance from changes we have introduced into the business reflecting our focus on trade, productivity and customer experience,” Teperson said. “We expect the changes made to date will continue to deliver a trend of improved performance in the second half.”