Is the captain jumping ship? It’s a question that has to be asked when retailer Baby Bunting Group (ASX: BBN) confirmed their long-time CEO would be departing the company on the same day they announced a 67% fall in net profit. 

For the half year ended 26 December 2022, Baby Bunting generated total sales of $254.9 million which represented a 6.6% increase on the previous corresponding 26 weeks. But alarmingly for shareholders, the increased sales were not reflected in the bottom line where statutory net profit came in at $2.7m, down 67% on the $8.1m reported last year. 

The Company attributed the dip in profit to changes in consumer trends where customers have reverted to pre-pandemic behaviour which resulted in a drop in touchless Click & Collect. Instead, customers opted to make their purchases in-store which accounted for 80% of total sales, and with it came the additional labour expenses tied to in-store operations. 

Unlike other brick-and-mortar retailers that reduced their exposure to retail shopfronts, Baby Bunting expanded its network during the pandemic, a feat that CEO Matt Spencer is extremely proud of. 

“Over the last 3 years, our sales have grown 36.7% noting that all Baby Bunting stores remained open during the COVID period,” said Spencer.

“As life has normalised, the market share gains made through COVID have predominantly been held onto.”

Despite the dip in profit, Spencer insists that Baby Bunting’s strategy remains unchanged and increasing market share will be driven by new stores where 5 new locations were opened in H1, and another in Loganholme, Brisbane having just opened last week to take the total network to 69 locations across Australia and New Zealand. 

Two more are expected to open in Orange, New South Wales and Christchurch, New Zealand in the coming months. 

For shareholders though, the 67% decline in net profit has resulted in Baby Bunting declaring an interim dividend of just 2.7 cents per share, down on last year’s interim dividend of 6.6 cents per share. 

Accompanying the release of their Half Year results, Baby Bunting confirmed that Spencer will be standing down as CEO and Managing Director after more than 11 years in the role which saw him lead the retailer to become the dominant player in the baby goods sector. 

“Matt has led Baby Bunting with distinction throughout his term. He joined Baby Bunting in the years before its IPO and led the team that successfully listed Baby Bunting in October 2015,” said Baby Bunting Group Chair, Melanie Wilson. 

“At that time, the store network consisted of 33 stores with around $200 million in annual sales. That has grown to 70 stores in Australia and New Zealand and annual sales in excess of half a billion dollars. 

“Matt and his team have executed on the Company’s strategy to grow market share while also focusing on the Company’s core purpose to support new and expectant parents.” 

To ensure a smooth transition where Spencer has overseen the incredibly difficult pandemic period, he will stay on in the role until a replacement is appointed.