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Baby Bunting (ASX: BBN) has announced the departure of long-time CEO Matt Spencer in tandem with its financial results which show underlying growth continues despite cost increases hitting the bottom line.
Spencer, who has been in the top job at Baby Bunting for more than 11 years, says the decision to leave has been difficult and that he will work with the company to ensure a smooth transition of leadership.
“I believe now is the right time to commence the transition as Baby Bunting moves into its next phase of growth,” he says.
During his tenure, Spencer led Baby Bunting's IPO and ASX listing in October 2015 and has overseen growth of the group's store count from 33 to 70 across Australia and New Zealand with annual revenue growing from $200 million to more than $500 million in that time.
Baby Bunting today announced a 66.7 per cent slump in statutory net profit to $2.7 million for the first half of FY23, despite a 6.6 per cent increase in revenue to $254.86 million.
The bottom line was impacted by a $10.3 million increase in business costs which included the opening of five new stores during the half-year as well as expenses in establishing the business in New Zealand.
In-store sales which account for 80 per cent of total sales, performed strongly during the period, rising by 12.2 per cent, driven by the core nursery essentials category.
Online sales were up 6.5 per cent as consumers went back to pre-pandemic shopping habits. Baby Bunting says “click and collect” sales were down 30.2 per cent compared to the previous corresponding period – but they are still up 225 per cent over the past three years.
“Post-COVID, our product segment performance is normalising,” says Spencer.
“Nursery essentials, being a core category, continue to grow strongly and were up 12.7 per cent in the half (over three years, this category is up 39.4 per cent).
“Consumer staples, which are more widely available across general retail, saw a decline of 4.7 per cent.
“Play time items (including Play gear) declined 3.6 per cent in the half, reflecting price deflation and reduced demand after the pandemic.”
Baby Bunting has affirmed its earnings outlook issued in January which puts it on track for pro forma net profit after tax of between $21.5 million and $24 million.
The company is paying a fully franked interim dividend of 2.7 cents per share, down from 6.6 cents in the previous corresponding period.
Investors pushed Baby Bunting shares almost 12 per cent lower to $2.17 today in a broadly lower market. They were trading at $2.25 at 2.45pm AEDT.
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