Infant retailer Baby Bunting showing early signs of revival with profit leap

Infant retailer Baby Bunting is showing early signs of revival led by product innovation, as it posts a near 40 per cent leap in half-year profit.

The company on Tuesday said sales hit $254.4 million in the six months to the end of December, up from the $248.5m recorded a year ago. Net profit grew 37 per cent to $4.8m, in line with Baby Bunting’s trading update last month.

The board has determined no interim dividend will be paid, with the company looking to reinvest in its growth.

Chief executive Mark Teperson said its focus on driving sales through range innovation and new customer acquisition was delivering results.

“Newness in our ranges continues to resonate, with new customer acquisition up 12 per cent on the prior period,” he said.

“Our exclusive branded products remain a key traffic driver and, with a strong pipeline of exclusive launches in the second half, we expect this momentum to continue.”

Gross profit margin improved 260 basis points over the first half to 39.8 per cent, driven by Baby Bunting’s simplification of its pricing, renegotiating its supplier trading terms and supply chain initiatives.

Baby Bunting, which operates 75 stores across Australia and New Zealand, reaffirmed its full-year earnings guidance of between $9.5m to $12.5m.

The company’s profits have slumped in recent years as consumers cut discretionary spending due to higher cost-of-living pressures.

But Ord Minnett senior research analyst James Casey on Tuesday said Baby Bunting was making positive progress on improving sales, operating margins and profit momentum.

“With early signs of turnaround emerging, we maintain our positive recommendation,” he said.