Australia's largest baby and specialty nursery retailer, Baby Bunting Group Limited, has released its preliminary unaudited financial results for the first half of FY24 with a decrease in revenue and pro forma NPAT compared to H1 FY23, but improvements in Q2 sales metrics and new customer acquisition.

The company reported H1 FY24 revenue of $248.5m, a decrease from $254.9m in H1 FY23, representing a -2.5% change in sales. The gross profit margin remained steady at 37.2%. Pro forma NPAT fell from $5.1m in H1 FY23 to $3.5m in H1 FY24.

However, Q2 sales metrics showed an improving performance relative to Q1, with total growth of -1.5% and comparable store sales of -5.3% in Q2 FY24, compared to total growth of -3.3% and comparable store sales of -8.8% in Q1 FY24.

Baby Bunting CEO, Mark Teperson, attributed the improvements in operations and performance to changes introduced into the business, focusing on trade, productivity, and customer experience. "Our first half update shows that while conditions have remained challenging, we are beginning to see improvements in operations and performance from changes we have introduced into the business reflecting our focus on trade, productivity and customer experience. We expect the changes made to date will continue to deliver a trend of improved performance in the second half," said Teperson.

The company has also refreshed its go-to-market strategy with an increased focus on performance marketing and social media, resulting in a growth in new customer acquisition of 6.6% in Q2 compared to -8.4% in Q1.

Teperson also highlighted the performance of the company's New Zealand business. "A particularly pleasing element has been the performance of our New Zealand business which is trading to plan. The store network has expanded to four stores, with Manukau and Sylvia Park (both in Auckland) and Christchurch all opening in Q2," he said.

Despite a more competitive pricing environment, the gross margin has remained at 37.2%. The company commenced a program of inventory reduction on less productive components of its range in Q2, resulting in inventory finishing $14 million below December 2022.

The Group's net debt finished the half at around $6 million, against $20 million at the end of 1H FY23. Baby Bunting had 70 stores in Australia and 4 in New Zealand at the end of the half. The Camperdown store was closed in December due to an inability to agree a reasonable rent for the site, expected to deliver a cost benefit of around $1 million in 2H.

"I am excited about the traction that we are beginning to see from the initial changes we have introduced from November and I look forward to providing further details on our first half performance and our plans for the year ahead at our results presentation in February," concluded Teperson.