Baby goods retailer Baby Bunting Group (ASX:BBN), has released their earnings for the half year ending 31st December 2015. The company cited improvements in revenue and gross margins and forecasted a positive outlook for FY16.
Revenue up 30%
Revenue for the period ending 31st December 2015 was $108.2 million, being an over 30% increase to the PCP. The improved result was in part supported by a 48% increase in online sales growth, when compared to the PCP. Moreover, as at the 31st January 2016, store sales growth expanded by 11.2%.
Gross Margins increased by 0.5%, to 34.3% for the period. This result was attributable to an increased focus on product sourcing, along with growth in private label and exclusive products.
On the contrary, profit after tax for the period was 23% down to the PCP, to $2.2 million. However, this decrease is partly attributed to the transaction costs associated with their IPO in October 2015 ($1.8 million).
Over the period, Baby Bunting has opened 4 new stores, with 1-2 more planned for the second half of FY16. This is in line with their growth strategy of opening 4-8 new stores yearly.
Moreover, there have been 70 plus trade areas identified, based on demographic, location, along with competition metrics.
As of the 31st December 2015, the company hasn’t declared an interim dividend.
Baby Bunting has updated their FY16 guidance, with sales expected to be in the range of $225-235 million. Along with Pro Forma EBIT to be between $16.5-18.5 million.
Furthermore, the baby goods retailer expects store sales growth to moderate throughout the second half of FY16. Gross Margins are also expected to remain largely the same to the first half of FY16.
CEO and Managing Director Matt Spencer commented on the results: “We are delighted to report on our first result as an ASX listed company and to welcome our new shareholders. Baby Bunting had a successful period across the business including strong comparable store sales growth, opening 4 news and increased EBITDA margin. This result is a credit to the Baby Bunting team across all of our 35 stores.”
As of 10.30am (AEDT), BBN has slightly risen by 0.8%, to $2.52. Since its IPO in October 2015, BBN has garnered investor’s significant returns of approximately 78%.
Author: Ben Khouri
Feb 12, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.