Baby Bunting has reported record FY25 results and reaffirmed its FY26 guidance, driven by strong sales growth and the ongoing Store of the Future refurbishment program. The company is expanding both large and small format stores, aiming to return to a +10% EBITDA margin business.
- Record FY25 sales of $522 million and 228% NPAT growth
- FY26 pro forma NPAT guidance maintained at $17.0-$20.0 million
- Store of the Future refurbishment program to refurbish 11-12 stores in FY26
- Launch of Baby Bunting Junior small format stores with positive early feedback
- Capital expenditure of $30-$35 million fully funded through operating cash flow
Strong FY25 Performance Sets Stage for Growth
Baby Bunting has delivered a standout FY25 performance, with total sales reaching a record $522 million and pro forma net profit after tax soaring by 228% to $12.1 million. This growth was achieved despite challenging retail conditions marked by elevated cost-of-living pressures, underscoring the resilience of the company’s strategy and its specialty baby products market leadership.
The company’s gross margin improved significantly, exceeding the 40% target with a 340 basis point uplift, while the return on funds employed rose to 12.1%. New Zealand operations also showed promising momentum, with sales growth of 49% and a clear path to profitability expected by FY27.
Store of the Future – A Transformative Initiative
The Store of the Future refurbishment program has been a key driver of Baby Bunting’s recent success. The initial three refurbished stores delivered an average sales uplift of 30%, well above the original 10% target, validating the company’s investment in reimagining the customer experience. This new store format focuses on activity-based layouts tailored to parenting needs, enhancing both in-store engagement and omnichannel fulfilment capabilities.
For FY26, Baby Bunting plans to refurbish 11-12 stores, with six refurbishments scheduled in the first half. The company targets comparable store sales growth of 15%-25% post-refurbishment, although the refurbishment program will cause some unusual sales patterns and cost impacts throughout the year.
Expanding Footprint with New Formats
Alongside refurbishments, Baby Bunting is expanding its store network. Two new large format stores will open in the first half of FY26, with additional openings planned later in the year. The company is also piloting its Baby Bunting Junior small format stores, designed for high-density urban areas, focusing on core baby essentials and consumables. Early results from the first two pilots in Queensland and Victoria have been encouraging, with strong customer retention and no cannibalisation of existing stores.
The company aims to grow this small format network to 20-40 stores over time, contingent on pilot success, targeting $2.5 million in annual revenue per store and a 50% return on invested capital.
Financial Outlook and Capital Discipline
Baby Bunting has reaffirmed its FY26 guidance, expecting pro forma NPAT between $17.0 million and $20.0 million, supported by 4%-6% comparable store sales growth and a gross margin target of 41%. Capital expenditure is forecast at $30-$35 million, fully funded through operating cash flow, reflecting disciplined capital management.
The earnings guidance is weighted towards the second half of FY26, reflecting the impact of refurbishment closures in the first half. The company anticipates operating leverage improvements and continued margin expansion as refurbished stores ramp up sales.
Leadership and Sustainability Focus
Leadership changes include the appointment of Stephen Roche as Chair and Debra Singh as an independent Non-Executive Director, bringing extensive retail and operational expertise. The Board emphasizes a commitment to sustainability, with initiatives such as car seat recycling and reductions in single-use plastics, alongside community support programs.
Overall, Baby Bunting’s strategic execution, store innovation, and disciplined growth plans position it well to capitalize on a sizeable $6.3 billion market opportunity across Australia and New Zealand.
Bottom Line?
As Baby Bunting advances its Store of the Future rollout and new formats, investors will watch closely for sustained sales momentum and margin expansion through FY26.
Questions in the middle?
- Will the Baby Bunting Junior small format stores meet financial and expansion targets?
- How will refurbishment-related sales disruptions impact full-year profitability?
- Can New Zealand operations achieve profitability as projected in FY27?