Baby Bunting Group Lifts Profit 33.9% as Gross Margin Hits Record

Baby Bunting Group (ASX: BBN) delivered record total sales of $556.0 million and lifted pro forma net profit after tax (NPAT) 33.9% to $16.1m in the 2026 financial year, as its gross margin reached a record 41.2%.

Comparable store sales increased 3.5% and the Store of the Future refurbishment program generated an 18% sales uplift after reopening, while statutory NPAT rose 17.5% to $11.2m.

Online sales grew 16.7% to $140.5m, representing 25.3% of total sales, with the active customer base increasing 4.2% to 862,000.

The retailer entered FY27 with comparable sales up 4.3% across the first six weeks to 9 August and has guided to further earnings growth.

Margin Gains Driving Earnings

Gross profit increased 9.3% to $229.2m as the higher-margin softgoods category grew 12.9% and the combined share of private label and exclusive products reached 50.3% of sales, up 320 basis points from the prior year.

BabyBuntingMedia generated $5.8m of revenue in its first full year, while the Stokke exclusive partnership signed during FY26 joined the retailer’s existing exclusive brand relationships and will contribute for a full year in FY27.

Cost of doing business increased to $191.6m but fell 30 basis points as a share of sales to 34.5%, helping EBITDA rise 33.4% to $37.6m excluding the impact of lease accounting.

The pro forma result excludes employee equity incentive expenses and certain transformation project expenses, with those adjustments accounting for the difference from statutory earnings.

“FY26 was a year of disciplined execution against our strategic plan,” chief executive officer Mark Teperson said.

“Rising interest rates and elevated fuel prices weighed on consumer spending through the second half, impacting some higher-priced prams and car safety categories—however, even in this more challenging consumer environment, we delivered NPAT growth of 54% in the second half, reflecting the underlying strength of the business.”

Network Investment Returns

Baby Bunting completed 12 Store of the Future refurbishments during FY26, alongside three new large format stores and three BabyBunting Junior small format pilots, while about 1,000 retail trading days were lost during full-store refurbishment closures.

Average refurbishment build costs declined from $1.7m per store in the first half to $1.5m in the second half, with the retailer targeting $1.4m for A and B grade stores and about $1.0m for C and D grade stores in FY27.

Refurbished stores maintained a capital payback of less than three years and recorded gross margins ahead of peer stores, supporting plans for another 10 to 12 refurbishments in FY27, including five to six in the first half.

The small format rollout has been paused while Baby Bunting refines the pilots, while three new large format stores are planned for FY27 and the New Zealand business is targeting break-even during the year.

Growth Plan Taking Shape

Baby Bunting expects FY27 pro forma NPAT of $19.0m to $21.0m on total sales of $585m to $600m, comparable store sales growth of 3% to 5% and a gross margin of 42%.

Capital expenditure is forecast at $33m to $37m and is expected to be fully funded from operating cash flow, down from $44.5m invested in FY26 across store projects and other growth initiatives.

Net debt finished FY26 at $16.2m after that investment program, with more than $60m of undrawn facility headroom and operating cash flow of $36.2m reflecting cash conversion of 96.4%.

The board will not pay a final dividend as Baby Bunting prioritises funding the store rollout and refurbishment program, with the next trading update scheduled for its annual general meeting on 13 October.