While retailers are challenged more than ever, this ASX-listed operator is kicking goals.
Our Pathway Six Unit Trust tenant Baby Bunting is turning heads in Australia’s Large Format Retail space.
What’s the story?
The ASX-listed outfit smashed their previous year’s sales results with expected EBITDA for FY20 between $33 million and $34 million. That’s a 22-25 per cent increase on the previous year despite bushfires, eCommerce and COVID-19 threatening their operation.
Baby Bunting also finished FY20 with $13 million in cash and zero debt.
The company’s growth in sales is in line with its increase in gross profit margin, which is expected to be 36.2 per cent, a 120 basis point increase.
Net profit after tax is expected to be 29 per cent to 35 per cent higher than its previous year, at between $18.5 million and $19.5 million.
How did they do it?
Baby Bunting stands apart from most retailers, as it’s less impacted by the drop in discretionary spending. Despite the pandemic, expectant parents still need car seats, cots, clothes and other baby supplies. Baby Bunting is effectively an essential service (for those who can’t yet walk).
Baby Bunting also adapted during the pandemic, increasing their online sales 39 per cent in FY 20. This was much larger than their total sales growth of 12 per cent.
What does that mean for Properties & Pathways investors?
Baby Bunting has recently started shipping to New Zealand while more stores are opening in Melbourne and NSW. The business will continue to grow while many retailers unfortunately cease or slow their operations.
Our investment partners in Pathway Six Unit Trust now have even more comfort their tenant Baby Bunting – which remains up-to-date with rental payments – will continue to operate strongly despite Australia’s economic uncertainty. The multi-tenanted asset at 214 Brisbane Rd, Booval QLD is fully leased and has provided investors a rolling annual return to date of 8.25 per cent p.a..
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