Friday's announcement came as the company reported a two-thirds drop in statutory profit for the half to $2.7 million.
Chair Melanie Wilson said Mr Spencer will leave an enduring legacy at Baby Bunting as the company begins the search for his successor.
"He has successfully executed on the company's strategy that has seen it grow to be the leading nursery goods retailer in Australia and has laid out a vision for Baby Bunting's growth here and overseas," she said.
Whoever takes over the mantle will face a challenging economic environment, with inflation showing no sign of abating.
Dramatic increases to supply chain and transport costs drove down profit margins, despite a 6.6 per cent growth in sales.
While nursery essentials grew 12.7 per cent over the half, consumer staples, such as nappies, dropped 4.7 per cent amid competition from general retail stores.
Baby Bunting's share price sank to a one-year low on the news, plunging 7.1 per cent to $2.28 after lunch.
But the company still holds an enviable market share.
Sales grew by more than a third over the past three years, as they managed to keep all stores open during pandemic lockdowns.
"As life has normalised, the market share gains made through COVID have predominantly been held onto," Mr Spencer said.
The company remains bullish about its growth prospects, reaffirming its commitment to building market share further as it eyes expanding its Australian store count to 110.
Its first New Zealand location opened in Auckland in August, with a second storefront set to launch in Christchurch later this year.
The share of in-store sales grew 12 per cent as shoppers continue to revert to bricks and mortar stores and away from online.
Baby Bunting announced it would be slashing dividends to 2.7c a share, from 6.6c the previous corresponding period.
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