Baby Bunting’s strategy to target the soft goods space – which covers clothing and footwear – is paying off, with the retailer reporting a 12.9 per cent growth in the category in FY26.
The baby goods retailer ramped up its focus in soft goods two years ago, which includes its own private label Bilbi and 4Baby, as well as third party labels such as Bonds and Purebaby.
According to Baby Bunting, the soft goods market in Australia is worth around $3.4 billion, with the brand currently owning around just 3 per cent of the market. This is compared to the $1.8 billion hard goods market, which Baby Bunting claims to own around 23 per cent.
“Soft goods remain a significant opportunity for us, where every percentage point of share is worth around $34 million in revenue,” the company shared in its annual report, released today. “Winning more of that segment, and the margin it carries, is central to our strategy and we are making good progress.”
The bump up in soft goods is helping drive up Baby Bunting’s overall gross margins, which grew by 100 basis points to 41.2 per cent. This also drove the retailer’s total sales for the year, lifting 6.5 per cent to $556 million, alongside a 3.5 per cent increase in comparable store sales.
At the bottom line, Baby Bunting reported a net profit after tax (NPAT) of $16.1 million, which is up 33.9 per cent on the prior year.
”Rising interest rates and elevated fuel prices weighed on consumer spending through the second half, impacting some higher-priced prams and car safety categories,” Baby Bunting CEO Mark Teperson said.
“However, even in this more challenging consumer environment we delivered NPAT growth of 54 per cent in the second half, reflecting the underlying strength of the business.”
Teperson also spotlighted the retailer’s Store of the Future program, involving upgrading the company’s store fleet. A dozen store refurbishments were completed during FY26, with 15 out of its 80 stores now being upgraded.
These refurbished stores, Teperson said, delivered an average 18 per cent sales growth in FY26 since re-opening.
As for the 41.2 per cent gross margin for FY26, Teperson said this was a record high for the business, supported by both exclusive and private label ranges which now represent more than half of its total sales. This was also reportedly driven by its retail media arm, BabyBuntingMedia, which contributed $5.8 million in revenue.
“We continue to enhance our margin flywheel through better product, stronger economics and new income streams that scale with our network growth and customer base.”
Looking ahead, Baby Bunting reported that the first six weeks of trade to August 9 saw sales keep the momentum, lifting 6.1 per cent compared to the same time last year. Comp sales grew 4.3 per cent, with Australian comp sales up 3.9 per cent, and New Zealand comp sales booming by 15 per cent.
The retailer noted that comp sales growth is expected to moderate, reflecting the ramp-up of the first half refurbishment program. “This trend is expected to normalise once those stores re-open,” Baby Bunting noted.
The company also issued NPAT guidance for FY27, which they predict will hit between $19 million and $21 million. This assumes total sales of $585 million to $600 million, comp sales growth of around 3-5 per cent, and gross margins hitting 42 per cent.