Through COVID-19, one of the better problems for retail businesses has been to not qualify for JobKeeper support, and is the case for Baby Bunting (ASX: BBN) which reported bumper FY20 sales of $405m, an 11.8% increase on the previous year.
Strong results for the baby products retailer come despite disruption caused through the pandemic, with parents still having to spend on their bubs. The Company was able to meet demand through a 39.1% increase of online sales.
Made even more impressive was the fact the Company had updated it’s online store in July 2019 before an abundance of customer complaints and eCommerce issues led the retailer to revert back to the old site and log a $3.2m non-cash impairment for the failed project.
“This year has been anything but normal and in that context Baby Bunting’s performance has been very pleasing,” said Baby Bunting CEO, Matt Spencer.
“While the COVID-19 pandemic has presented some unexpected challenges, we remain very focused on executing on our growth strategy.
“Our website and digital performance has been strong and our investments in digital will continue. We have a road map to progressively transform the technologies that drive our digital channel and the ways in which our customers can interact with Baby Bunting.”
Although delivering an 11.8% increase in sales, statutory NPAT was down 14% to $10m. However, this included business transformation expenses and the website failure write-off. Without those expenses, pro forma NPAT was $19.3m.
While online sales were strong, they still only accounted for 14.5% of total sales and is one of the reasons Baby Bunting has announced plans to increase their store network at a time when others are scaling back.
Through FY20, the retailer opened one new store in Victoria and two more in New South Wales to bring their national network to 56. Spencer has now announced plans to increase their previous target of 80 store nationwide.
“Today, I announce an expansion of our store network plan to over 100 stores. We have plans to continue to expand our private label products,” he said.
“We have expanded our services business from car seat installation into car seat hire and soon will be extending that into other product categories. We have commenced shipping to customers in New Zealand and are undertaking an assessment of that market.”
Acknowledging the hard work of their staff through the pandemic which led to their strong FY20 sales, Baby Bunting will reward all full time staff with a $250 gift card and part time staff with one for $200. Furthermore, they will also mare $1,000 of BBN shares available to eligible team members under their General Employee Share Plan, the sixth consecutive annual offer under the plan.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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