Baby Bunting has reported record half-year sales and margin growth for 1H FY26, underpinned by its Store of the Future refurbishments and strategic expansions. The company maintains its full-year profit guidance while unveiling a new exclusive partnership with premium brand Stokke.
- Record half-year sales of $271.4 million, up 6.7%
- Gross margin improved to 41.0%, up 124 basis points
- Underlying pro forma NPAT grew 44% to $7.2 million
- Nine Store of the Future refurbishments completed
- New exclusive three-year partnership with Stokke announced
Strong Financial Performance
Baby Bunting Group Limited has delivered a robust first half for FY26, reporting record sales of $271.4 million, a 6.7% increase on the prior corresponding period. This growth was driven by a 4.7% rise in comparable store sales and the opening of new stores, including five new locations and the annualisation of two stores opened in the previous year.
Gross margin expanded significantly to 41.0%, up 124 basis points year-on-year, reflecting improved supplier terms, growth in private label and exclusive products, and reduced clearance activity. Underlying pro forma net profit after tax (NPAT) surged 44% to $7.2 million, excluding significant items related to store refurbishments and network optimisation.
Store Network Transformation
The company’s Store of the Future refurbishment program remains a central pillar of its growth strategy. Nine stores have now been refurbished, with six completed in the first half and another six scheduled for the second half of FY26. These refurbishments have driven average sales growth of 25% in refurbished stores, validating the investment despite some higher-than-expected costs in 1H.
Alongside refurbishments, Baby Bunting expanded its footprint with new large format stores in Dubbo (NSW) and Westgate (NZ), and launched three BabyBunting Junior small format pilot stores targeting inner urban and regional catchments. Early results from these pilots are mixed but promising, with strong gross margin achievement and no cannibalisation of surrounding stores.
Digital and Brand Initiatives
Online sales continue to gain momentum, now accounting for nearly 25% of total sales and growing 18% year-on-year. The company has scaled online fulfilment to 100% from stores, optimising delivery costs and leveraging existing labour. Additionally, BabyBuntingMedia, a new retail media income stream launched in late 2024, is tracking to plan at around 1% of sales, contributing to margin expansion.
Marketing investments have increased, with advertising spend rising to 2.7% of sales, supporting customer acquisition and brand awareness. Notably, Baby Bunting has secured an exclusive three-year partnership with Stokke, a premium Norwegian children’s brand, enhancing its product offering and market positioning.
Expansion in New Zealand
Baby Bunting’s New Zealand operations showed encouraging progress, with comparable store sales growth of 16.5% and gross margin improvement of 140 basis points. The company is targeting a breakeven pro forma NPAT in FY27 through continued brand investment, supply chain efficiencies, and labour productivity improvements. The NZ store network currently comprises five locations, with plans to expand to over ten stores.
Outlook and Guidance
Management has maintained its 2H FY26 pro forma NPAT guidance range of $12.5 million to $14.5 million, with full-year guidance now expected between $17.5 million and $19.5 million. This outlook assumes full-year comparable store sales growth of 5% to 7% and gross margin above 41%. Capital expenditure is forecast between $41 million and $43 million, supporting ongoing store refurbishments and new openings.
While refurbishment costs in 1H were slightly above target, value engineering and operational learnings are expected to bring costs in line with the $1.5 million average per store in 2H. The company also continues to focus on productivity initiatives, including labour optimisation and supply chain cost savings, to support margin expansion and earnings leverage.
Bottom Line?
Baby Bunting’s strategic store transformations and brand partnerships set the stage for sustained growth, but execution risks around refurbishments and market conditions remain key watchpoints.
Questions in the middle?
- How will the small format pilot stores perform over the full year and influence future expansion?
- What impact will the exclusive Stokke partnership have on Baby Bunting’s market share and margins?
- Can New Zealand operations achieve breakeven NPAT as planned in FY27 amid competitive pressures?