Baby bunting hoppers crossing car seat fitting

Baby Bunting Group Limited Half Year Ended 1 January 2017

Results Presentation 17 February 2017

Matt Spencer Chief Executive Officer & Managing Director

Darin Hoekman Chief Financial Officer

Baby Bunting

• Founded in 1979, Baby Bunting is Australia’s largest specialty baby goods retailer

• Successful multi-channel retailer operating 40 stores across Australia, with the leading specialty baby goods website by number of visits

• Target market is parents-to-be, parents, friends and family purchasing products for the 0 to 3 year age group across all demographics

• Principal product categories include prams, cots and nursery furniture, car safety, toys, babywear, feeding, nappies, manchester, associated accessories and consumables

Baby Bunting is Australia’s largest specialty retailer of baby goods, aiming to provide customers with the widest range of products, high levels of service and low prices every day

3

ALL THE BEST BRANDS AT LOW PRICES

CAR SEAT

FITTINGLAY BY

PERSONALISED SERVICE

GIFT REGISTRY

EXCLUSIVE PRODUCTS &

BRANDS

IN STOCK AND AVAILABLE

Store Experience Stores are consistent in branding, range, operations and customer service

• The widest range of products with over 6,000 products in store

• Price match guarantee and continued investment in value for the customer

• Increasing range of Private Label and Exclusive Products

• Services include lay-by, car seat fitting, parenting room, in-store / online gift registry

• Click and collect in-store fulfilment from January 2017

• Dedicated team of knowledgeable staff to service customers individual needs

• Comprehensive range of Best Buy products to meet everyday parenting needs













12



Strong customer loyalty in-store & online with a Net Promoter Score of ~58 (1)

Note: 1. Source: Baby Bunting. As at 1 January 2017. Net Promotor Score commonly referred to as NPS is a customer loyalty & satisfaction metric. Net Promoter®

and NPS® are registered trademarks and Net Promoter Score and Net Promoter System are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld

Drivers of Competitive Advantage

Consistent Retail Format

Convenient Network of Stores and Online

Cost Effective Marketing

Customer Centric Team Culture

Comprehensive Range of Ancillary

Services

Competitively Priced

Widest Product Offering, In Stock

and Available

Scale Platform

10

Baby Bunting’s Store Network

Hawthorn East Bentleigh Frankston Taylors Lakes Narre Warren

Ringwood Thomastown Ballarat Geelong Hoppers Crossing

Maribyrnong Bendigo Preston (19 Aug)

Victoria

Helensvale Kawana Fortitude Valley Townsville Macgregor

Booval North Lakes Burleigh Waters Capalaba

Queensland

Penrith Warners Bay Taren Point Auburn Moore Park

West Gosford Campbelltown Camperdown (21 Oct) Belrose (19 Dec) Fyshwick (ACT)

New South Wales and ACT

Cannington Myaree Joondalup

Midland Osborne Park Baldivis (18 Nov)

Western Australia

Gepps Cross Melrose Park

South Australia

40 stores across Australia, with significant roll-out potential to over 80 stores

11

6 stores

2 stores

9 stores

10 stores

13 stores

Industry Overview

40

18 16

8

3 3 3 3

Baby Bunting Babies"R"Us Superstore

Baby Bounce

Bubs Baby Co Baby Kingdom Baby Savings Baby Mode

SPECIALTY BABY GOODS RETAILERS IN AUSTRALIA Number of Stores

Note: 1. Toys"R"Us has an additional 18 stores that sell a limited range of baby goods 2. Baby Bounce purchased 15 of 21 stores of the retail chain My Baby Warehouse (MBW). MBW went into administration in Dec-15

8

Estimated addressable market is ~$2.4bn pa /

~1 million 0 to 3 year olds

Changing competitive landscape

Large number of small, specialty players & department stores

Strict Australian mandatory product safety standards provide barriers to entry

VIC, NSW, QLD, SA, WA, ACT

VIC, NSW, QLD, SA, WA, ACT

WA, QLD, NSW QLD, NSW VIC NSW NSW VIC

(1) (2)

306

191 186

67 42 40

Target Kmart Big W Myer David Jones

Baby Bunting

DEPARTMENT STORES IN AUSTRALIA Number of Stores

Department stores where baby goods are a component of the overall offer

Online www.babybunting.com.au continues to evolve & grow as the leading specialty baby goods website

Note: 1. Source: Baby Bunting. Measures total non-unique website sessions across all devices 2. Source: Google Trends for Australia only

• Online is the largest store in the network

• 55% increase in website visits on prior comparative period, and a 44% increase for the month of December year-on-year

• Significant increase in online sales on the prior comparable period, now approx. 5.9% of sales

• Social media leveraged across Facebook, Instagram, Pinterest and Twitter

• Engagement with loyal customer base through “baby talk” forums

TOTAL WEBSITE SESSIONS BY MONTH (babybunting.com.au) (1)

0

150

300

450

600

750

900

1,050

1,200

1,350

Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16

13

GOOGLE TRENDS (2)

Baby Bunting

Baby Bounce / Baby Warehouse

Babies”R”Us

Baby Kingdom

Bubs

0

20

40

60

80

100

120

Supplier Relationships Strong growth in Private Label and Exclusive Products(1)

• Network of more than 230 suppliers across third party brands, private label and exclusive products

• Top 10 suppliers represent 48% of sales

• A focus of the business has been to increase the level of direct sourcing, private label and exclusive products

• Private label and exclusive product sales have grown from 10.0% of sales for FY2016 to 11.2% of sales in 1H FY2017

Notes: 1. Private Label and Exclusive Products includes products sold by Baby Bunting under its own 4Baby brand (ie private label products) as well as products

sourced by Baby Bunting for sale on an exclusive basis (so that those products can only be purchased in Australia from Baby Bunting stores). Historically, exclusive supply arrangements have been arranged with suppliers in relation to selected products and for varying lengths of time

% OF SALES – PRIVATE LABEL AND EXCLUSIVE PRODUCTS

SUPPLIER BREAKDOWN BY SALES (1H FY2017)

Top 10 suppliers

48%

Remaining suppliers

52%

2.0% 3.1%

5.0%

7.2%

10.0% 11.2%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

FY2012 FY2013 FY2014 FY2015 FY2016 1H FY2017

17

1H FY2017 Results Highlights

TRADING(1)

• Sales of $135.1 million, up 18.1% on the prior corresponding 27 week period

• Comparable store sales growth of 8.2%

• Gross profit income up 17.7%, gross margin of 34.4% is 11 bps below 1H FY2016

• Cost of doing business (pro forma) improved by 43 bps from 1H FY2016, to 26.8% of sales

1

EARNINGS(2)

• EBITDA (pro forma) of $10.4 million, up 23.3% on the prior corresponding period • EBIT (pro forma) of $8.4 million, up 21.9% on the prior corresponding period • NPAT (pro forma) of $5.7 million, up 22.5% on the prior corresponding period • Interim dividend of 2.9 cents per share (fully franked)

2

CAPITAL STRUCTURE

3

GROWTH

• EBITDA (pro forma) margin growth of 32 bps on the prior corresponding period, to 7.7% of sales • Investment in customer experience in-store & online and our people culture programs • 4 stores opened in 1H FY2017 in Camperdown and Belrose in NSW, Preston in VIC and Baldivis in WA

4

OUTLOOK • 3 new stores expected to be opened in 2H FY2017 • FY2017 EBITDA expected to be in the range of $21.5 – $24.5 million, excluding employee equity incentive

expenses

5

6

• $3.2 million of cash at end of 1H FY2017, plus $20.0 million undrawn borrowing facility • Net cash flow from operating activities of $7.6 million • Capital expenditure of $3.8 million

Note: 1. Pro forma financial results have been calculated to reflect the result of the consolidated entity for the previous corresponding period as if the Company

was publicly listed for full comparable 27 week period. Refer to page 34 for a reconciliation of week 27 trade. In addition, the current and prior corresponding periods have been calculated to exclude employee equity incentive expenses for comparison to FY2017 guidance.

2. Refer to page 34 for a reconciliation of the non-IFRS financial information contained in this presentation to the IFRS-compliant information

Growth Priorities Multiple drivers of organic growth

Growth from existing stores and online

• 43% of stores are less than 3 years old (at 1 January 2017)

• Multiple initiatives to improve customer experience across all channels

• Growing brand awareness across all states and territories

• Increased investment in digital and online

Growth from new store roll-out

• Network plan of 80 plus identified trade areas with a target of 4 to 8 new store openings each year

EBITDA margin improvement

• Gross margin expansion by increases in scale, improving sourcing options and managing product mix

• Leverage significant investment made in Technology, the Support Office and Distribution Centre

1

2

3

20

Growth from New Store Roll-Out 4 new stores opened in 1H FY2017, 3 planned for 2H FY2017

• Opened 4 new stores in 1H FY2017

• Pipeline of new store opportunities for 2H FY2017

• Target 4 to 8 new store openings each year

• Network plan of 80 plus trade areas identified based on demographic, location and competition parameters, ~45% of remaining sites are in regional locations (population < 200,000)

• 2 regional stores opened in FY2015 continue to trade in line with expectations

• 1,500 to 2,000 square metres in bulky goods centres or at stand-alone sites. Regional store format of 1,000 to 1,200 square metres without compromising on range or service

NUMBER OF STORES

9 12 15

19 21 23

31 36

40

0

20

40

60

80

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 1H FY2017 Network Plan

80+

22

27.9% 27.5%

26.4%

27.2% 26.8%

FY2014 FY2015 FY2016 1H FY2016 1H FY2017

PRO FORMA EBITDA (1) ($ million)

8.0

12.4

18.7

8.4 10.4

FY2014 FY2015 FY2016 1H FY2016 1H FY2017

150.2 180.2

236.8

114.4 135.1

0

100

200

300

FY2014 FY2015 FY2016 1H FY2016 1H FY2017

7.9% margin

Strong Financial Track Record 1H FY2017 sales growth of +18.1% and pro forma EBITDA growth of +23.3% 1

GROSS MARGIN (1) (%)

~26% CAGR

5.3% margin

6.9% margin

PRO FORMA CODB (%) (1,2)

27

7.7% margin

45 bps

SALES (1) ($ million)

33.3%

34.3% 34.3% 34.6% 34.4%

FY2014 FY2015 FY2016 1H FY2016 1H FY2017

109 bps

Note: 1. 1H FY2016 based on 27 week period. Refer to page 34 for reconciliation. 2. Refer to Glossary for a definition of CODB (%)

7.4% margin

43 bps

+18.1%

11 bps

Baby Bunting �Group Limited�Half Year Ended 1 January 2017 ��Results Presentation�17 February 2017

Important Notice and Disclaimer

Baby Bunting

Agenda

Results �highlights

1H FY2017 Results Highlights

Industry�overview

Industry Overview

Business overview

Drivers of Competitive Advantage

Baby Bunting’s Store Network

Store Experience

Online

Investment in Digital and the Customer Journey

Sales and Marketing Strategy

Logistics & Supply Chain

Supplier Relationships

Building the Best Team

Growth strategy

Growth Priorities

Growth from Existing Stores and Online

Growth from New Store Roll-Out

New Store Economics

EBITDA Margin Improvement

EBITDA Margin Improvement

Financial information

Strong Financial Track Record

Summary Pro Forma Income Statement

Balance Sheet

Cash Flow Statement

Outlook

Outlook

Appendix – �pro forma reconciliation

Statutory - Pro Forma Income Statement Reconciliation

Glossary

Slide Number 36