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- Australia’s largest baby goods retailer Baby Bunting (BBN) has seen continued sales growth in the financial year’s second half, despite the COVID-19 lockdown
- From the end of December 2019 to May 17, the company has seen 13.2 per cent total sales growth, while comparable-store sales growth is up 8.1 per cent
- Online sales account for 17.3 per cent of Baby Bunting’s total sales, which represents a rough 34 per cent increase compared to this time last year
- To meet the growing demand, Baby Bunting has commissioned another online fulfilment hub at Casula in NSW
- This hub will join fulfilment centres in Cannington and Hobart
- Baby Bunting is up 15.4 per cent on the market this afternoon, selling shares for $3.08
Australia’s largest baby goods retailer Baby Bunting (BBN) has seen continued sales growth this second half, despite COVID-19 lockdown.
From the end of December 2019 to May 17, the company has seen a total sales growth of 13.2 per cent and the comparable store sales growth is 8.1 per cent.
Online sales are 17.3 per cent of the total sales, which represents a growth of around 34 per cent, compared to this time last year.
“All Baby Bunting stores have remained open throughout the current period, but we have adapted how we work, and how we service and support our customers,” CEO Matt Spencer said.
“We have introduced no contact click & collect, as well as our Helping Hand telephone assisted shopping service, to provide choice in how and when our customers choose to shop with us,” he added.
Baby Bunting’s “Helping Hand” assisted telephone shopping service allows parents-to-be and new parents register to receive a personalised shopping experience over the phone with a store team member.
Matt said that during the period, there was a strong demand for lower margin consumable products, such as nappies and baby wipes. As the period has progressed, there was an increase in purchases for nursery products such as cots, furniture, toys and bedding.
“We did see lower transactions in travel-related products such as prams and car seats. However, as restrictions have eased, sales of these products have begun to recover,” he explained.
“It is difficult to anticipate how these buying trends will play out over the coming period and how gross margin will be impacted. In addition to this, we have seen costs increase to manage the changing operating environment,” he added.
Business initiatives
With 6000 babies born in Australia every week, it is the company’s strategy to support new and upcoming parents.
Since the last update in March, Baby Bunting has undertaken a number of initiatives to support parents.
The business has commissioned another online fulfilment hub at Casula in NSW, the hub will be joining the fulfilment centres in Cannington, WA and Hobart, Tasmania. These hubs will facilitate the prompt delivery of online orders.
Baby Bunting aims to fulfil 90 per cent of metro online orders in the same day and has made significant progress towards achieving this goal.
Capex program
Baby Bunting has tweaked its capital expenditure program and introduced a prudent cost management program in March and April in anticipation of potential future cash flow pressures.
As the pandemic’s effect on Baby Bunting’s financial performance has become more clear, the company has decided to recommence the capital expenditure that had been paused.
Outlook
Despite the financial news, Baby Bunting says the outlook remains uncertain.
In March, the company withdrew its FY20 guidance due to the uncertainty around the virus.
Throughout this period, Baby Bunting stores have been open. However, the company said it remains difficult to anticipate customer behaviour in the current environment. This will continue to impact its financials, so the company has opted not to provide an outlook update for the financial year.
Baby Bunting is up 15.4 per cent on the market this afternoon, selling shares for $3.08 at 12:45 pm AEST.
