Australian retailer Baby Bunting has reported lifts in gross margin and total sales in early FY26 to October 12.
In a trading update alongside its AGM today, the retailer that sells a range of baby goods, including apparel, footwear and accessories, reported a 3.5 per cent lift in total sales year-to-date, with a 30 basis point lift in its gross profit margin to 40.6 per cent.
The company also reported a 2.2 per cent comparable store sales lift in the same time frame, which rises to 5.6 per cent when excluding six stores currently closed for refurbishment and five adjacent stores that are near to these closures.
Moreover, Baby Bunting reported a 13 per cent comparable store sales lift in New Zealand in early FY26, a stark turnaround in the country where many retailers have reported heavily impacted sales.
Given these early performance indicators, among ongoing store format shifts, Baby Bunting has reaffirmed its FY26 earnings guidance originally shared in August. This includes a projected $17 million to $20 million in net profit for the full financial year, assuming a full-year comp store sales growth of 4 to 6 per cent, a gross margin of 41 per cent and retail store cost of doing business investment among other projections.
With retail store investment, this includes $7 million for new and annualising stores, $2.5 million in refurbishment costs, including depreciation and de-fits, plus $0.5 million in relocation costs for one store. Baby Bunting also noted a $1 million cost for the permanent closure of its Hornsby store.
“Our plans are to refurbish 11-12 stores in FY26,” Baby Bunting CEO Mark Teperson said. “Three stores are due to re-open in the coming two weeks, with a further three stores to be refurbished and reopened through November and early December.”
As at October 12, Baby Bunting’s store network was 77 stores. The refurbished stores will include the retailer’s new Store of the Future concept.
“When we reported in August, the three [Store of the Future] stores we had refurbished in Q4 delivered an average sales uplift of 28% since reopening – nearly three times our original 10 per cent target. We’re pleased to see consistent performance, with these three stores delivering an average sales uplift of 30 per cent year-to-date.
“These results provide us with confidence around our sales uplift targets for refurbished stores being 15 per cent to 25 per cent. With six more stores to be refurbished this half, we will have further signal in support of these targets.”
Baby Bunting is also set to open two large format stores this half of the financial year, including one in Dubbo, New South Wales, and another in Westgate, New Zealand, and another in the second half of FY25.
The retailer is also testing a small-format store concept, with two pilot stores currently operating in Robina, Queensland and Plenty Valley in Victoria, with a third pilot store to open in late 2025.
Called Baby Bunting Junior, Teperson said these small stores represent an opportunity to target high density, inner-city catchments with superior economics.
“Each store targets $2.5 million in annual revenue and 50 per cent return on invested capital by focusing on higher-margin consumables and core baby essentials,” Teperson said. “Should these pilots be successful, we see potential to expand the small-format network to 20-40 stores over the medium to long term.”
Despite being early days, Teperson said the Junior store concept is generating strong response from customers, with 73 per cent of sales in these two stores coming from existing Baby Bunting customers and no discernible sales redirection impacting the existing large format stores that are in the same catchments.
“This early behaviour supports our thesis around growing customer lifetime value through greater convenience and a focus on Eat, Play and Sleep categories.”