Baby Bunting Group Ltd

BBN Details

Stock tumbled on potential impact of Amazon’s arrival in Australia: Planned investments and anticipated Baby Bunting Group Limited (ASX: BBN) reported 17.4% yoy growth in sales at $278.0 million, while posting 47% yoy growth in net profit after tax at $12.2 million for the financial year ended 25 June 2017. The company’s pro forma EBITDA was $23.0 million, up 23.0% on FY2016 ($18.7 million), and pro forma net profit after tax was $13.0 million, an improvement of 21.9% (FY2016: $10.6 million). The Company had 42 stores at the end of the year, having opened new stores in Preston in Melbourne, Camperdown, Belrose and Blacktown in Sydney (the largest market), Baldivis, south of Perth and Mile End in Adelaide. In July 2017, the Company opened its 43^rd store in Munno Para, a suburb north of Adelaide. Comparable store sales growth was 6.9%, which is a growth rate in line with the Company’s expectations and the Company’s long term historical average. Earnings results were also very positive with pro forma NPAT growth of 21.9% and pro forma EBITDA growth of 23.0% on the 2016 financial year. Despite the strong results, the stock has tumbled 17.9% after the results announcement as it seems that investors are worried about the new investments and potential impact of Amazon’s arrival in Australia. We maintain an “Expensive” recommendation on the stock at the current market price of $1.60
 

BBN daily chart; (Source: Thomson Reuters)

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