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Baby Bunting (BBN) high risk opportunity or just hype?

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    Baby Bunting (BBN) high risk opportunity or just hype?

    Good morning, I have found your recent notes really interesting, thank you! I have been hesitant to jump on the share price rising momentum for Baby Bunting. Their latest results were not surprising and no guidance was offered for FY24, yet the share price jumped. Historically, this business has demonstrated it can deliver and grow profitably. Does MM believe BBN's management can successfully navigate the current market conditions and deliver the growth strategy? Thanks, Angela

    Answer

    Hi Angela,

    Baby Bunting has unfortunately fallen over 80% from its 2021 illustrating that its its been a tough few years  for the retailer of baby products, as it has for many, but not all retailers  (i.e. Super  Retail  (SUL). Its no great surprise that BBN didn’t provide FY24 guidance when they reported this month as it was only back in June that they downgraded guidance due to a slowdown in sales. FY23 saw a +1.7% increase in total sales to $515.8mn helped by new store openings while on-line sales slipped -8.6% to $103mn.

    Overall costs are up and margins lower but this has been reflected in the share price, its not one for MM but value has definitely returned around $2. To specifically answer your question we would say its hard the tell, the recent track record does not warm the heart!

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    Baby Bunting Group Ltd (BBN)
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