Baby Bunting anticipates FY26 pro forma NPAT between $16 million and $17 million, marking a 32% to 40% increase from FY25, despite weaker sales in the fourth quarter. The retailer’s Store of the Future refurbishments and online channels continue to drive growth amid a challenging consumer backdrop.
- FY26 pro forma NPAT expected at $16.0m to $17.0m, up 32-40%
- Total sales forecast around $553m to $555m, 6% growth
- Comparable store sales growth slows to ~3.5%
- Gross margin to exceed 41%, with strong online and refurbished store growth
- Net debt projected near $20 million, capex and costs stable
Profit Growth Tempered by Softer Q4 Performance
Baby Bunting (ASX:BBN) has trimmed its full-year profit expectations after a weaker-than-anticipated finish to FY26. The company now projects pro forma net profit after tax (NPAT) between $16.0 million and $17.0 million, representing a 32% to 40% uplift on the prior year’s $12.1 million. However, this falls short of earlier guidance that anticipated a stronger second half, with 2H NPAT now expected between $11.0 million and $12.0 million, versus a prior forecast of $12.5 million to $14.5 million.
The fourth quarter slowdown was attributed to softer consumer spending, particularly in prams and car safety categories, which weighed on average transaction values. Baby Bunting’s CEO Mark Teperson highlighted the impact of three Reserve Bank cash rate hikes and rising fuel costs during the second half, which dampened demand and increased distribution expenses.
Sales Growth Supported by Refurbished Stores and Online Channel
Despite the Q4 softness, total sales for FY26 are expected to reach approximately $553 million to $555 million, up around 6% on the prior year. Comparable store sales growth slowed to roughly 3.5% for the full year, with the second half seeing a further deceleration to about 3%, down from previous guidance of 6% to 8%. This slowdown contrasts with the robust growth earlier in the year, when Baby Bunting reported record half-year sales of $271.4 million and a gross margin improvement to 41.0% record half-year sales of $271.4 million.
The company’s Store of the Future refurbishment program continues to be a bright spot, delivering approximately 18% sales growth for the full year and around 16% in the second half. This initiative, which involves upgrading store formats, also saw two of the largest store openings in June. Online sales growth remains strong at about 16% for FY26, contributing to overall margin expansion.
Margins, Costs, and Balance Sheet Remain Healthy
Baby Bunting expects its gross margin to exceed 41% for FY26, improving from 40.2% in FY25, with a second-half margin around 41.5%. The company has maintained disciplined cost and capital expenditure management, with capex and operating costs tracking in line with plans. Net debt is forecast to finish at approximately $20 million, reflecting a solid balance sheet posture.
Teperson emphasised the company’s confidence in its strategic direction, citing a strong new product pipeline in car safety and ongoing refurbishment benefits as key drivers for future growth. The retailer is also building momentum in New Zealand, with second-half sales growth exceeding 15%.
Baby Bunting plans to release its full-year results on 14 August 2026, which will provide a more detailed view of its financial performance and outlook.
Bottom Line?
While Baby Bunting’s FY26 profit growth remains solid, the Q4 slowdown signals potential headwinds as consumer pressures persist into FY27.
Questions in the middle?
- Will the softness in prams and car safety categories persist into FY27?
- How will Baby Bunting’s Store of the Future program influence margins and sales growth moving forward?
- Can the company sustain online sales momentum amid rising consumer cost pressures?