Baby Bunting shares tumble as Q4 sales growth slows
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More news: Shares in Baby Bunting tumbled in early trade after the infant products retailer downgraded its second-half profit guidance following a soft fourth quarter, driven by weak consumer spending.
Shares fell 5.4% to $1.55 at 10:54am AEST.
RBC Capital Markets analyst Jackie Moody maintains a “sector perform” rating with a $2.60 price target, noting that despite the macro-driven headwinds, the company’s operating costs and capital expenditure guidance remain positive as they align with expectations.
Baby Bunting downgrades second-half profit guidance as sales growth slows
The news: Baby Bunting has downgraded its second-half pro forma net profit after tax (NPAT) to a range of $11 million to $12 million, down from the $12.5 million to $14.5 million previously guided.
The numbers: As a result, the group now expects FY26 pro forma NPAT to be between $16 million and $17 million, representing a 32% to 40% increase from the corresponding period.
Total sales are expected to range between $553 million and $555 million, a year-on-year increase of 3.5%, while the full-year gross margin is expected to exceed 41%, expanding to 41.5% in the second half.
Comparable store sales growth is projected to be 3% in the second half, down from the 6% to 8% previously guided.
Meanwhile, the Store of the Future program continues to perform in line with expectations, with an 18% growth target for the full year and 16% in the second half. Group capital expenditure investments remain on track, with net debt projected to finish at approximately $20 million.
The context: Baby Bunting CEO Mark Teperson stated that trading activities had softened through the fourth quarter, as three RBA interest rate hikes, alongside elevated fuel prices have weighed on consumer spending and added to the company’s distribution costs.
He added that sales across Baby Bunting’s non-refurbished store network did not meet expectations over the last seven weeks, as softness in the prams and car safety categories led to lower average transaction values.
What they said: “The fundamentals of the business and the strategy we are executing remain strong. We look forward to continuing to execute and drive value for our customers and shareholders through FY27,” Teperson said.
The sources: ASX, RBC Capital Markets analyst note
