Overview of Baby Bunting's financial report for the half-year ended 31 December 2023

Baby Bunting Group Limited (ASX: $BBN) has reported a 1.1% decrease in statutory net profit after tax (NPAT) for the half-year ended 31 December 2023. The company's total sales declined by 2.5% to $248.456 million in 1H FY24. The financial report also includes a reconciliation of the statutory results to pro forma financial results for the prior comparable period ended 26 December 2022.

Executive commentary on Baby Bunting's financial performance and operational achievements

Baby Bunting, Australia's largest specialty retailer of maternity and baby goods, faced a challenging trading environment in 1H FY24. The company's core purpose is to support new and expectant parents in the early years of parenthood. Despite the decline in total sales, the company achieved key operational milestones, including opening four new stores and implementing working capital management initiatives that generated $25.924 million in cash from operating activities. Additionally, the company successfully reduced less productive inventory lines, resulting in a $14.187 million reduction relative to the prior corresponding period. Furthermore, the company's corporate cost restructure delivered net overhead savings of approximately $3 million. The revised advertising and marketing approach, with an increased focus on performance marketing and social media, correlated with a 6.6% growth in new customer acquisition in Q2 FY24 compared with -8.4% in Q1 FY24.

Summary of Baby Bunting's financial results and outlook

In 1H FY24, Baby Bunting reported a 1.1% decrease in NPAT and a 2.5% decline in total sales. The company's pro forma NPAT decreased by 31.3% on the prior corresponding period. The decline in total sales was driven by negative comparative store sales of 7.0%, partially offset by sales growth from the addition of four new stores. Online delivery sales grew by 2.5%, and click and collect sales remained flat. The company's gross margin remained flat at 37.2% despite a more competitive pricing environment. Pro forma Cost of Doing Business (CODB) expenses as a percentage of sales increased by 55 basis points to 32.9% of sales. The company paid a fully franked final dividend of 4.8 cents per share for the 2023 financial year and has determined to pay an interim fully franked dividend of 1.8 cents for the half-year ended 31 December 2023. Baby Bunting's financial report reflects the company's efforts to navigate a challenging market and its strategic initiatives to drive future growth.