There are plenty of shares trading higher on the ASX today, but Baby Bunting Group Ltd (ASX: BBN) isn't one of them. At the time of writing, the Baby Bunting share price is trading 6.9% lower at $1.675, although it did trade as low as $1.66 earlier.
The company provided a business update earlier today at the Morgans Queensland Conference 2017. Year-to-date comparative sales are now flat year-on-year – an improvement on the negative 4% comp sales as at 6 August, with the group stating that a return to mid-single digits growth remains the forecast.
However, it noted competitor distress and closures were impacting stock positions, and that market pricing was creating short-term margin pressure. Although it maintains its forecast of operating earnings (EBITDA) to be in the range of $25.3 million to $27 million (representing growth of 10% to 17%), Baby Bunting said the impact of changes in the competitor set and stock availability would need to stabilise to deliver growth within that range.
This certainly seems to have concerned some investors, particularly given the challenging retail environment of late. Shares of other retailers have also struggled this past year with JB Hi-Fi Limited (ASX: JBH) shares down 19.3% and Harvey Norman Holdings Limited (ASX: HVN) down 24%. Myer Holdings Ltd (ASX: MYR) has fared even worse with its shares down more than 37%.
Baby Bunting is worth a spot on your watchlist, but slower comparative sales growth, tight margins, a tough retail environment and the threat of Amazon.com when it expands down under are all reasons to be cautious.
