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Baby Bunting set for a growth spurt

AAP logoAAP 11/08/2016 Petrina Berry

Baby Bunting is poised to bolster its dominance of the $2.4 billion baby goods industry after enjoying stronger than expected sales.

The retailer's store expansion and the collapse of rival My Baby Warehouse in December has helped drive its growth, and cement its position as the biggest speciality infant goods retailer in Australia.

Strong sales of prams, car seats and nappies also contributed to Baby Bunting's 38 per cent profit growth in the year to June 26, to $8.33 million.

Revenue rose 31 per cent to $237 million, beating the upgraded guidance it issued in February of between $225 million to $235 million.

Same store sales, a key measure of revenue growth, jumped 12.5 per cent.

On top of strong demand for nappies and clothing, a growing trend of owning more than one pram was partly behind the strong sales, chief executive Matt Spencer said.

"They may have one in their house, the grandparents may have one and they may keep an umbrella-style stroller in their boot for quick trips," he said.

Baby Bunting debuted on the share market in October, and wants to more than double its current network of 36 stores to 80, with plans to add four to eight stores a year.

Among its competitors is Baby Bounce, which acquired some of the My Baby Warehouse stores, and discount department store retailers Kmart, Target and Big W.

A string of other speciality baby product retailers have gone into administration, including PramWarehouse and Mothercare Australia, which both now run only online businesses in Australia.

Mr Spencer said Baby Bunting, founded in 1979, has been strategic with its expansion, growing organically and not from acquisitions.

"We are clear about our store format size and who our customers are and we are clear about investment to support growth," he said.

"We have taken a different approach to others in the market as to how we have grown over time."

The group's strong sales momentum has continued into the current financial year, with same store sales up 15 per cent.

It expects sales growth to ease compared to the strong performance of 2015/16, and has forecast earnings before interest, tax, depreciation, and amortisation to be in the range of $21.5 million to $24.5 million in 2016/17, a rise of between 15 and 31 per cent.

Shares in Baby Bunting soared by almost 11 per cent soon after the release of its earnings report, and closed at a new record high of $3.06, up 22 cents, or 7.75 per cent.

BABY BUNTING'S BOUNCING PROFIT

* Net profit up 38pct to $8.3m

* Revenue up 31pct to $236.8m

* Final dividend of 6.3 cents, fully franked

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