Cost-of-living crunch hits spending on baby goods

Australia's biggest specialist baby goods retailer won't deliver on its earnings forecasts after weak sales of prams and car safety products over the past few months.

Baby Bunting now expects to make a net profit of $11 million to $12 million in the second half of its financial year, up 50 per cent to 64 per cent from a year ago, but below previous guidance of $12.5 million to $14.5 million.

The group also forecasts same-store sales growth of just three per cent in the second half, down from six to eight per cent in its previous guidance.

Given a difficult trading environment, the group's expected pro forma profit growth of 32 per cent to 40 per cent for the full year ending June 30 would still be a strong result, Baby Bunting chief executive Mark Teperson said on Wednesday.

"The three (central bank) cash rate rises in the second half, together with higher fuel prices, weighed on consumer spending and added to our distribution costs," he said.

Sales across the group's non-refurbished stores over the past seven weeks didn't quite go to plan.

That was due to softness in prams and car safety categories, which lowered average transaction values.

However, Baby Bunting stores that have undergone refurbishments are performing in line with forecasts, with sales up 18 per cent for the full-year.

The group has 74 stores in Australia and five in New Zealand.

About 15 of the Aussie stores have undergone extensive refurbishments as part of the "store of the future" program, to add features such as a whimsical canopy made up of baby bottles and calming spaces meant to evoke a friend's kitchen.

"The fundamentals of the business and the strategy we are executing remain strong," Mr Teperson said.

RBC Capital Markets analyst Jackie Moody said it was a negative update, but at least group costs, capital expenditure and the store of the future program remained in line with expectations.

In early afternoon trading, Baby Bunting shares were down 11.4 per cent to a two-week low of $1.46.