Baby Bunting Boosts Profit 45% Amid Steady Revenue Growth and Expansion
Baby Bunting Group Limited reported a 2.4% increase in revenue to $254.4 million for the half-year ended December 2024, alongside a 45.3% surge in net profit after tax. The company expanded its footprint with two new stores and improved gross margins, signaling operational momentum despite withholding an interim dividend.
- Revenue rose 2.4% to $254.4 million in 1H FY25
- Statutory net profit after tax increased 45.3% to $3.9 million
- Gross margin improved by 260 basis points to 39.8%
- Opened two new stores and relocated one in Australia
- No interim dividend declared for FY2025
Financial Performance Highlights
Baby Bunting Group Limited, Australia's leading specialty retailer of maternity and baby products, released its half-year results for the period ending 29 December 2024, showing a modest revenue increase of 2.4% to $254.4 million. More notably, the company posted a 45.3% jump in statutory net profit after tax (NPAT) to $3.9 million, reflecting improved operational efficiency and margin management.
The gross margin expanded significantly by 260 basis points to 39.8%, driven by strategic pricing adjustments, enhanced supplier terms, and refinements to the loyalty program. This margin improvement was a key contributor to the profit uplift despite rising costs.
Operational Developments and Growth Initiatives
During the half-year, Baby Bunting opened two new stores in Maroochydore, Queensland, and Belmont, Western Australia, while relocating its Mile End, South Australia store to Marleston. The company’s store network now comprises 75 locations across Australia and New Zealand, although the Taylors Lakes, Victoria store was closed in January 2025 following lease expiry.
Online sales, including click and collect, grew by 2.8%, supported by the launch of same-day and next-day delivery options via Uber, which accounted for approximately 7% of online orders since introduction. The company also launched a Retail Media business ahead of Boxing Day, aiming to capitalize on advertising revenue streams as it scales.
Cost Management and Balance Sheet
Pro forma cost of doing business (CODB) rose by 136 basis points to 34.3% of sales, reflecting investments in new store openings, wage inflation, restructuring costs related to support office changes, and increased spending on data analytics and marketing. Despite these cost pressures, Baby Bunting reduced net debt to $9.1 million from $13.0 million at the end of FY24, underscoring disciplined balance sheet management.
Notably, the Board decided against declaring an interim dividend for FY2025, signaling a cautious approach to capital allocation amid ongoing investments and market uncertainties.
Strategic Outlook
Baby Bunting is piloting its 'Store of the Future' concept, with refurbishment underway at the Maribyrnong location and plans for two additional stores by Q4 2025. This initiative aims to enhance customer experience and operational efficiency, potentially driving future growth.
With a stable net tangible asset base of $0.38 per share and a strengthened gross margin, the company appears well-positioned to navigate competitive pressures in the baby goods retail sector. However, the absence of dividends may temper investor enthusiasm in the near term.
Bottom Line?
Baby Bunting’s solid profit growth and operational expansion set the stage for a pivotal year ahead, but investors will watch closely for dividend signals and margin sustainability.
Questions in the middle?
- Will Baby Bunting resume dividend payments in the second half of FY2025?
- How will the 'Store of the Future' pilot impact sales and customer engagement?
- Can the company sustain gross margin improvements amid rising cost pressures?
