Baby Bunting started FY23 with a margin downgrade
Nick Sundich, October 11, 2022
Baby Bunting (ASX:BBN) shareholders punished the company today for revealing a hit to its gross margins. Despite recording sales growth, it has not been enough to outweigh the impact of increased freight and forex costs.
No time to do stock research, but you still want to invest?
Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY
Baby Bunting hit by rising costs
Baby Bunting has been relatively resilient to the pandemic as people have continued to have babies. But at today’s AGM, the company revealed its gross profit margin in the first quarter of FY23 fell from 38.7% to 37.2% in 12 months. As a consequence, BBN shares plunged over 20% this morning.
Baby Bunting (ASX:BBN) share price chart (Graph: TradingView)
The company blamed unrecovered cost increases, particularly freight charges and forex movements., as well as the commencement of its loyalty program and reduced demand in the play gear department.
The company told shareholders that total sales growth was 12% and comparable store sales growth was 7.6%. It also still planned to open a total of 8 stores in FY23, having opened 3 so far. But it declined to provide guidance for the full year.
A rough AGM
Baby Bunting revealed the bad news at its AGM this morning. It reminded shareholders about its achievements in FY22, including achieving sales of over $500m for the first time, and it grew its net profit (which was $29.6m) despite its expansion into New Zealand.
Looking forward, BBN told shareholders its current addressable market was $2.5bn and could grow to $3.5bn with its new Baby Bunting Marketplace.
This did not stop Baby Bunting shares from falling as its reputation as a safe-haven to external economic pressures is at risk, if it is not gone already.
No time to do stock research, but you still want to invest?
Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY
No credit card needed and the trial expires automatically.
Blog Categories
Get Our Top 5 ASX Stocks for FY25
Recent Posts
ClearVue Technologies (ASX:CPV): About to make big bucks from solar generating glass
ClearVue Technologies (ASX:CPV) may be one of the best ways for investors to gain exposure to the decarbonisation thematic. This…
Yancoal (ASX:YAL): Still thriving despite falling coal prices, but for how much longer?
Yancoal (ASX:YAL) was one of the largest producers of coal in Australia in 2024, showcasing resilience and flexibility in its…
Day trading stocks: Here is what it involves and is it better than long-term investing?
In recent years, day trading stocks has become an increasingly prominent investment opportunity, enabled by modern technologies like trading apps…