Prams, cots and car seats retailer Baby Bunting has played down the threat posed by Amazon, saying the US behemoth won't take a huge chunk of its market.
Baby Bunting chief executive Matt Spencer outlined what he said was the group's resilience after unveiling a 47 per cent lift in profit to $12.25 million for its 2017 financial year.
The group's comparable store sales, which strips out new store openings, grew 6.9 per cent in the year to June 25 - helping drive total sales to $278 million.
Comparable sales growth was weaker than the exceptional 10 per cent lift in the prior year due to the collapse of a competitor, but it was now more in line with its historical average, the company said.
Mr Spencer said Baby Bunting was in a good position to withstand Amazon's full rollout.
He told an analyst briefing that based on US, UK and Canada's experience, Amazon and eBay will likely make up 5.7 per cent, or $135 million, of Australia's $2.4 billion baby products market, leaving plenty of room for Baby Bunting to grow.
"Baby Bunting's success over the last 10 years has been at the same time eBay has built up a very successful marketplace in Australia," Mr Spencer said.
"I believe we have the offer, the range and the relationships with customers and suppliers so we can continue to grow successfully alongside a world where Amazon exists in our market."
He said Baby Bunting was also cheaper than Amazon, with about half its prices 30 per cent lower on average.
"Given the imminent arrival of Amazon we decided to bring forward some of our investments, most notably in digital and supply chain capabilities, to drive our competitive strengths," Mr Spencer added.
The company has forecast its same store sales for the 2018 financial year to grow at similar levels to 2017 despite a soft start to the new year.
Comparable sales were down four per cent in the six weeks to August 6 due to lower pram sales and changes to the group's promotions.
It has also cut its final dividend and increased capital expenditure in a move that appears to have upset investors.
Shares in Baby Bunting were down 32.5 cents, or 16.7 per cent to $162.5 at 1500 AEST amid wider market falls.
The company has forecast earnings before interest, taxes, depreciation and amortisation (EBITDA) to be in the range of $25.3 to $27 million, excluding employee equity incentive expenses.
Mr Spencer said the group, which plans to open five to eight news stores in the 2018 financial year, has "locked down" one of Woolworths' former Masters hardware stores and is looking at a couple of others.
BABY BUNTING FY PROFIT GROWS:
* Net profit up 47 pct to $12.5m
* Revenue up 17.4 pct to $278m
* Final dividend down 2.0 cents to 4.3 cents a share, fully franked
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