The Baby Bunting Group Ltd (ASX: BBN) share price is on watch after reporting its FY21 half-year result and announcing NZ expansion plans.
Baby Bunting FY21 half-year result
Baby Bunting reported that total sales rose by 16.6% to $217.3 million, with comparable store sales growth of 15% (or 21.8% excluding Victorian stores). It opened three new stores in the first half. There are 59 stores around Australia, with plans for over 100 in the country.
There was a booming level of online sales growth, up 95.9%, and click & collect sales grew by 218%.
Private label and exclusive products revenue grew by 28.2% to be 39% of total sales, up from 35.5% in the prior corresponding period. It’s targeting above 40% in FY21 and it’s aiming for a long-term target of 50% over the long-term.
Baby Bunting’s gross profit margin improved by 41 basis points (0.41%) to 37.4%. The pro forma EBITDA (EBITDA explained) went up 29.7% to $18.5 million and pro forma net profit after tax (NPAT) increased by 43.5%. Statutory net profit grew by 54.7% to $7.5 million. The pro forma results exclude certain items to tell investors about the underlying performance of the business.
The Baby Bunting board decided to declare a fully franked interim dividend of 5.8 cents per share, which was an increase of 41% compared to the last one.
Baby Bunting CEO and Managing Director Matt Spencer said: “Maternity and baby goods are essential products for parents and parents-to-be and are less discretionary in nature. Our strong comparable store and total sales growth performance demonstrates that we continue to deliver on our strategy of growing market share.”
New Zealand expansion plans
Baby Bunting commenced shipping online orders to New Zealand in July 2020 and has completed an assessment of the NZ$450 million New Zealand market opportunity.
The company now plans to launch a multi-channel retail proposition in New Zealand with the first store to be opened in FY22 as part of a network plan of at least 10 stores. It noted there are no large format baby specialty retail chains in the market.
Outlook
Comparable store sales growth for the six weeks of the second half was 18.5%, increasing the comparable store sales growth rate for the year to date to 15.7%. Baby Bunting said there’s a strong pipeline of new stores in FY22.
However, it still couldn’t give FY21 guidance due to potential COVID-19 restrictions and economic uncertainty.
With what Baby Bunting reported, it’s probably one of the most exciting ASX retailers at the moment, however, the valuation certainly isn’t cheap. But if it can keep adding highly profitable stores, then it could continue being a market outperformer.
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