Baby Bunting Share Price Drops Due to Profit Downgrade

After issuing a third profit warning, Baby Bunting [ASX:BBN] has seen a further drop in share value of 4.41%.

Baby Bunting’s shares have fallen below its 2015 share price.

The retailer saw this coming from miles away, as it knew full year earnings would impact the sector in a negative manner.

The stock clearance has been speculated to impact Baby Buntings stores across the fourth quarter of the year.

Baby goods market suffering

Although two of its smaller competitors (Buds Baby Shops and Baby Bounce) are going out of business, Baby Bunting has not reaped any benefits from the outcome.

In fact, its sales and gross margin have been affected in a negative way, due to the liquidation of its competitor’s stock.

Despite competitors going through even rougher times, the retailer still faces challenging conditions and further struggles with stores sales and gross margins.

Baby Bunting has revealed that issues with supply have also led to falling sales. The Australian Financial Review reported that Baby Bunting CEO Matt Spencer stated:

Also, some supply issues with a leading car seat supplier, which were expected to resolve from mid-October, have only now started to resolve, this has adversely affected sales by around $2 million during this time.

Many of Baby Buntings stores have fallen flat in comparison to last year’s standards.

What’s next for Baby Bunting?

Mr Spencer believes the business has opportunity to further grow in 2019, as this year they are tasked with damage control with its suppliers and management. With the decline of its competitors, the retailer has plenty opportunity for future growth.

Although, even with competitors falling short, online retailers such as Amazon do pose a threat to Baby Bunting.

Just because their competitors are going through rough times, doesn’t necessarily mean it will be all sunshine and rainbows for Baby Bunting.

Regards,

Ryan Clarkson-Ledward,
For Markets & Money

PS: Falling on hard times can happen to just about any large business, knowing what not to invest in is just as important as knowing what to invest in. Discover why these five household name stocks could be the first to lose you money when Aussie stocks drop dramatically. Download your free report ‘Sell These Five ‘Fatal’ Stocks Now’ now.


Ryan Clarkson-Ledward is a junior analyst for Markets & Money. Ryan has degrees in both communication and international business. His priority is bringing you the latest price updates on stocks through ASX updates, as well as supporting Sam Volkering with background research. As part of the team at Markets & Money his aim is to provide unbiased and relevant news for readers. Ryan’s work with Sam is designed to provide research that complements Sam’s analysis for small-cap and technology stocks. Together, their objective is to break through all the jargon and give you the hard facts to inform your investment decision-making. Ryan writes for:


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