Australian retailer Baby Bunting has lifted its gross margin by 124 basis points to 41 per cent in the first half of FY26, in line with its full-year target.
This comes alongside a 6.7 per cent lift in total sales to $271.4 million in the first half, with comparable stores rising by 4.7 per cent, exceeding guidance.
Baby Bunting sells a range of baby goods, including clothing, toys and hard goods like prams and cots. The brand operates 78 stores across Australia and New Zealand, in different formats.
A decent portion of the first-half sales jump is coming from its ‘Store of the Future’ refurbishment program, with nine upgraded stores average sales up 25 per cent since re-opening.
Most of these store upgrades has lifted cost of doing business (CODB). Six of the ‘Store of the Future’ refurbishments, alongside other network shifts, added $1.9 million to the total $96.8 million in CODB for the half. The increase in total CODB also reflected new and annualising stores, wage inflation, higher marketing spend focused on brand building, and administrative expenses tied to investment in capability and platforms.
At the bottom line, the retailer recorded a net profit after tax (NPAT) of $5 million, which is up 4.1 per cent compared to the first half of FY25.
"We’re pleased to have delivered another strong result, exceeding expectations across multiple metrics and demonstrating the ongoing momentum in our strategy,” Baby Bunting CEO Mark Teperson said.
“Our record revenue result was driven by growth in our customer base, the continued success of our Store of the Future program along with strong gross margin performance.”
Regarding the store refurbishments, Teperson said the team prioritised speed in its capex investment so stores would be open and trading through key sales events. This is supporting stronger returns, he noted, meeting its promise to achieving a sub-three-year payback.
“For the second half of the year, in addition to refurbishing six stores, our focus is on refining the operating model to ensure we balance store replenishment cycles with elevated demand,” Teperson said.
Baby Bunting has re-affirmed its full-year guidance, targeting $12.5 million to $14.5 million in NPAT for the second half. Full year pro forma NPAT guidance is now $17.5 million to $19.5 million.
In the first seven weeks of the second half to February 15, Baby Bunting confirmed sales are up by 6.7 per cent, with Australia comp sales growth up 6.4 per cent, while New Zealand comp sales are up 17.8 per cent.