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.
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