Baby Bunting keeps FY27 plan as Store of the Future uplift reaches 20%

FY27 guidance survives a softer start

Baby Bunting Group Limited (ASX:BBN) has kept its FY27 targets intact even as trading growth moderates, reporting 2.2% underlying comparable store sales growth in the first 14 weeks of the financial year. The figure excludes seven stores closed for refurbishment and adjacent stores benefiting from redirected sales, making it a trading measure rather than a like-for-like read across the full network.

Australian underlying comparable sales rose 2.0%, while New Zealand delivered 8.7% growth on a constant-currency basis. Gross margin is tracking to plan, and management reaffirmed FY27 targets of A$585 million to A$600 million in sales, 3% to 5% comparable store sales growth, a 42% gross margin and pro forma net profit after tax of A$19 million to A$21 million.

Store refurbishments remain the central earnings bet

The main evidence supporting that plan is the Store of the Future program. Seventeen refurbished stores are now trading, with cumulative average sales growth of 20% in the first 365 days after reopening. That improves on the 18% uplift reported for the FY26 cohort and gives the retailer a tangible, if still relatively small, proof point for its network transformation. Baby Bunting’s earlier record FY26 margin result had already established the connection between refurbishment activity and stronger group earnings.

Baby Bunting plans another 10 to 12 refurbishments in FY27, with six due in the first half. North Lakes and Shellharbour reopened in September, while three more stores are scheduled to reopen in November and one in December. The company has flagged closure periods of 10 to 12 weeks and the extent of sales redirected to nearby stores as risks to the program’s execution.

Record FY26 margin creates room for investment

The strategy enters FY27 with stronger financial momentum. FY26 sales reached A$556.0 million, up 6.5%, while gross margin expanded 100 basis points to a record 41.2%. Pre-AASB 16 EBITDA rose to A$37.6 million, or 6.8% of sales, and pro forma NPAT increased 33.9% to A$16.1 million. Statutory NPAT was A$11.2 million, up 17.5%.

Retail media contributed A$5.8 million of revenue in its first full year, while private-label and exclusive products, including the Stokke partnership, are being used to support mix and margin. Cash conversion improved to 96%, and net debt ended FY26 at A$16.2 million with more than A$60 million of debt headroom. Capital expenditure of A$33 million to A$37 million is expected to be funded through operating cash flow, although the board has chosen not to pay a dividend for FY26 while the refurbishment program continues.

Network expansion adds to the execution test

Alongside the refurbishments, Baby Bunting has committed to three new large-format stores in FY27, including Ballina in December and two planned for late in the fourth quarter. The Kawana store will also relocate to Baringa, while the three Baby Bunting Junior small-format pilots remain under review. Management is targeting New Zealand pro forma NPAT break-even in the second half of FY27, with a stated expectation that the market will contribute to group earnings from FY28.

The arithmetic is attractive but demanding: refurbishment closures can temporarily suppress sales just as the company targets 3% to 5% comparable growth, while the next major tests arrive during November, Boxing Day and the June Storktake period. Whether the refurbished stores can keep their sales uplift as more of the network is converted, and whether margin expansion can offset a cautious consumer, are the questions embedded in the reaffirmed guidance.