Baby Bunting Group’s Shares Mounted On ASX After Announcing An Improved Sales Outlook For FY 2019

Baby Bunting Group Ltd (ASX: BBN) held its annual general meeting (AGM) on 19 November 2018. At the Annual General Meeting, the company informed about its improved sales outlook with EBITDA now expected to be in the range of $25.0 million to $27.0 million, representing growth of between ~34% to ~45% in FY 2019. Following the release of this news, the share price of the company increased by 10.831 percent as on 19 November 2018.

At the AGM, the company reported that the Comparable store sales growth for the first 20 weeks of FY 2019 (up to 15 November 2018) have been 9.6 percent. The total sales of the company increased by 17% relative to the prior comparable period. Further, there has been positive gross margin improvement, and Baby Bunting is on track to achieve guidance of gross margins exceeding 34% for the year. The company is expecting to open two new stores prior to Christmas, bringing the store network to 52 stores.

In FY 2018, the total sales of the company were $303.1 million which were 9 percent higher than the prior corresponding period. On a pro forma basis, earnings before interest, tax, depreciation and amortization were decreased by 18.9 percent in FY 2018 to $18.6 million compared to the prior corresponding period. The Pro forma net profit after tax decreased by 25.9 percent to $9.6 million in FY 2018. At the end of FY 2018, the company was having cash of $7.2 million and borrowing facility of $19.2 million. In FY 2018, the company paid total dividends of 5.3 cents per share fully franked, representing around 70 percent of pro forma NPAT. The net cash flow from operating activities were $10.5 million, and the total capital expenditure was $6.7 million. The online sales in FY 2018 increased by 63 percent in FY 2018 as compared to the online sales of last year and it represents 9.5 percent of the total sales of the company.

In terms of online and digital progression, the company is making steady progress on the implementation of its new website platform which will deliver a high level of engagement as it is more content-focused and offers all the e-commerce functionality. So far in FY 2019, the company has opened stores at Toowoomba in Queensland, at Chatswood in New South Wales, and Hobart in Tasmania. Further, the company will be opening its first shopping centre store at Chadstone Shopping Centre in Victoria which is one of the largest shopping centres in the southern hemisphere. The company recently started to make further investments in technology with new in-store communication systems and hand-held devices to improve operating efficiencies which will benefit its teams and, ultimately, its customers.

In the last six months, the share price of the company increased by 27.24 percent as on 16 October 2018. BBN’s shares traded at $2.200 with a market capitalization of circa $250.99 million as on 19 November 2018 (AEST 4:00 PM).


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