Baby Bunting’s strategy to expand its store network appears to be paying dividends, with refurbished outlets recording a 25 per cent increase in sales over the past six months. The company, which specialises in nursery and pram retail, had a surge in popularity during the pandemic but has since worked to maintain its momentum. During the first half of the financial year, Baby Bunting refurbished six stores and opened five new ones, with plans to upgrade another six by August.
Mark Teperson, Baby Bunting’s chief executive, who previously worked at Afterpay, believes the new store layouts will attract more customers and assist parents in making purchasing decisions for prams, car seats, and baby clothes. While the refurbished stores have shown a 25 per cent average increase, the company noted higher-than-expected renovation expenses, with each store costing an average of $1.7 million, up from the initial estimate of $1.5 million. The company anticipates a payback period of less than three years.
In the six months leading up to December 29, Baby Bunting reported a 6.7 per cent increase in revenue, reaching $271.4 million. However, net profit decreased by 52.5 per cent to $1.8 million, and net debt increased from $9.1 million to $21.1 million. The company expects full-year profits to range between $17.5 million and $19.5 million, excluding certain costs. Baby Bunting shares spiked 40.5 per cent on August 15, following the release of its results for the previous year and increased profit guidance, but have since fallen.
Jackie Moody, an analyst at RBC Capital Markets, noted the store strategy’s strong top-line results. However, she expressed concern about the company’s increased forecast for the rollout, despite no increase in the number of stores planned. Baby Bunting is currently assessing the effectiveness of its smaller store formats and does not intend to pay a dividend.
