Baby Bunting Group (BBN) H2 2024 earnings summary

Executive summary

• FY 2024 pro forma NPAT was AUD 3.7 million, within guidance, with statutory NPAT at AUD 1.7 million; strong cash conversion of 86% and no final dividend to support growth initiatives.

• The business operates 70 omni-channel stores in Australia and 4 in New Zealand, with 85% brand awareness and over 800,000 active loyalty customers generating 90%+ of sales.

• Four new stores opened (three in NZ, one in Australia), with one closure; omni-channel and online fulfillment now available across all stores.

• Strategic initiatives launched in June 2024 are driving improved sales and margin momentum, with early FY 2025 sales up 3.5% and comp sales up 2%.

• Comparable sales declined 6.3% year-over-year, but improved sequentially in 2H; online sales grew 5.6% and now represent 21.8% of total sales.

Financial highlights

• FY 2024 gross margin was 36.8%, down 56 bps year-over-year due to competitive discounting and inventory clearance, but Q4 and July 2024 saw margin improvement of 180 bps year-on-year.

• Total FY 2024 sales were AUD 498.4 million, down 3.4% year-over-year; pro forma EBITDA was AUD 15.9 million, down 48.9% year-over-year.

• Online sales grew 5.6% year-over-year, now 21.8% of total sales; Marketplace GMV reached AUD 3.1 million, with AUD 1 million in new in-store product sales from Marketplace brands in H2.

• Cost of doing business rose by AUD 6 million, mainly from new and annualizing stores, offset by AUD 3 million in overhead cost outs and AUD 3.5 million in labor productivity savings.

• Net debt at year-end was AUD 13 million, with a renewed $70 million debt facility extended to September 2027.

Outlook and guidance

• FY 2025 pro forma NPAT guidance is AUD 9.5–12.5 million, with comparable store sales growth of 0–3% and targeted gross margin of 40%.

• Six new stores planned (three large, three small format), with CapEx of AUD 10–13 million, fully funded by operating cash flow.

• On track to deliver targeted 40% gross margin for FY 2025; July 2024 gross margin up 180 bps year-over-year.

• Long-term gross margin target is 42%; cost of doing business to rise due to wage inflation (3.75%), new stores, and investment in data/analytics and NZ support.

• Outlook assumes stable economic and retail conditions, and no significant increase in sea freight costs.