Retailers Pental and McPherson's follow Baby Bunting with profit downgrades

Australian retail is looking increasingly shaky ahead of the imminent arrival of US online giant Amazon, with three listed ASX small cap retailers announcing profit downgrades in two days.

Pental (ASX:PTL), which makes household products such as White King and Pears, fell 22 per cent today after announcing a halving of profits for the half-year to December.

Beauty and healthcare retailer McPherson’s (ASX:MCP) dropped 18 per cent after the maker of Dr LeWinn’s skincare and Multix cling wrap announced a profit downgrade of 10 to 15 per cent compared to last year.

McPherson’s shares opened down after a profit downgrade. Source: Investing.com

Baby Bunting (ASX:BBN) shares fell 9 per cent yesterday, due to “challenging conditions” that saw its earnings fall to $23 million from expectations of $25.3 to $27 million.

“The recent retail price deflationary environment has impacted margins and growth across the grocery manufacturing sector,” Pental chief Charlie McLeish told investors.

Pental’s profits for the six months to December would be almost half that of 2016 — down to $1.2 million from $2.3 million, Mr McLeish said.

Pental was “expecting lowered financial performance in the first half of FY2018 compared to the first half of FY17 due to disruption in the Australian retail landscape from new entrants”.

Pental's share price over the past week. Source: Investing.com — Pental’s share price over the past week. Source: Investing.com

McPhersons told investors that “a comprehensive re-forecast of current financial year outcomes just completed indicates that the difficult trading environment and soft consumer sentiment currently being experienced will result in a decline in 1H 2018 revenue in the order of 6 per cent compared with last year.”

Baby Bunting (ASX:BBN) chief Matt Spencer yesterday told shareholders: “Given the challenging conditions in the first four months, we think it appropriate to adjust our guidance.

Aggressive discounting among competitors and “supply issues with a leading car seat supplier” adversely affected sales by about $2 million, the baby retailer said.