Specialty retialer focusing on baby goods. The largest of its kind in Australia.

Network growth is a big part of the growth story. Have more than doubled store count in past 5 years, now at 47 sites. Targeting 80 sites at maturity.

In my experience, network growth tends to have diminishing returns, as the best sites are established first. Also, such a program of expansion is very capital intensive.

Nevertheless. around 1/3 of stores are less than 3 years old, and stores take around 4 years to mature. So there is some good potential flex in the existing store network.

Same store sales were flat and each site had higher costs. Aggressive discounting by a (now closed) competitor caused price deflation and margin pressure in FY18. In fact, a lot of competitors have closed, which in total accounted for $138m in sales. See page 12/13 of recent investor presentation. This opens up some good opportunity, but on the othert hand points to the very tough nature of the market, and retail in general. 

The start of FY19 has been extremely strong (and help spur a big jump in the share price). In the first 6 weeks, same store growth of almost 10%, with total sales up 16.5% 

Seeing a strong increase in online sales, but off a small base. Online sales now 9.5% of total.

Speaking of online, company says most of its products not found on amazon, and for those that are, most are still cheaper at Baby Bunting. Se pg 14 of presentation. Will that last? Will offers such as Amazon prime help swing the value proposition for many consumers?

The company is shifting more to private lable products. These represent around 20% of sales in FY18, and expected to be 25% in current year. This will help lift gross margins.
 

All told, certainly some big potential (which the market seems to be focused on). But we've seen this story before and growth tends to fade as the network matures. Retail is incredibly tough and cyclical. Competition rising from the likes of Amazon and others.

Worth a buy at the right price -- but way too high for me at present. See my forecast page for more.