Cost-of-living pressures and higher interest rates have pulled infant goods retailer Baby Bunting into the dark cloud over discretionary retailers, which have increasingly reported languishing sales amid a crunch in consumer spending.
On Tuesday, Baby Bunting slashed its full-year profit expectation by a third as it struggled to improve sales. The $189 million company said it expected its net profit after tax to be in the range of $13.5 million to $15 million, compared with its previous guidance of $21.5 million to $24 million.
Despite Baby Bunting’s “Storktake” promotional event, the retailer said its trading both in stores and online was “unprecedentedly low” and well below expectations. Total sales growth for the financial year was about 1 per cent and comparable store sales growth was negative 3 per cent.
The company said that if the slowdown in sales continued, it expected comparable store sales to be between negative 4 per cent and negative 5 per cent, particularly as June traditionally delivered a larger proportion of the company’s second-half profit.
While it has maintained a gross margin towards the lower end of its expectations, the retailer said the full-year figure would likely be moderately below the bottom end of that range.
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Shares in Baby Bunting took a pummelling, dropping 19 per cent to $1.45 a share about 1.30pm AEST.
Consumer discretionary stocks have been particularly sensitive to the higher interest rates and cost-of-living pressures putting a dampener on household spending.
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