The Baby Bunting Group Ltd (ASX: BBN) share price has surged 25% after the retailer announced a big profit recovery in FY25.
Baby Bunting is the largest physical retailer of baby and toddler-related products in Australia, including prams, car seats, furniture, toys, blankets and so on.
Baby Bunting FY25 result
Here are some of the main highlights from the report for the 12 months to 29 June 2025:
- Sales grew by 4.7% to $521.9 million
- Gross profit margin increased by 340 basis points (3.40%) to 40.2%
- Underlying net profit after tax (NPAT) grew 228% to $12.1 million
- Reported NPAT surged 462% to $9.5 million
What drove this result?
Baby Bunting said that the group saw “strong performance” across all key categories, with a particularly strong performance in soft goods as the ‘store of the future’ format led to a 6% increase in the basket size and a 24% rise in transactions.
The store of the future refurbishment led to a 28% sales uplift across three stores opened in FY25. Those stores exceeded expectations and saw a gross profit margin improvement of 40 basis points (0.40%) above its network performance for July.
It’s going to roll out the new store design across the network and upgraded its targeted growth rate for refurbishment stores to 15% to 25%.
On top of that, exclusive and private label brands now represent 47.1% of total sales, up 110 basis points (1.10%) compared to FY24.
Another area of growth came from customer growth – active customers increased 4.5% year on year to 828,000.
Profitability and costs
The gross profit improved by so much thanks to “pricing architecture simplification, renegotiated supplier trading terms, supply chain optimisation, and the elevated performance of exclusive and private label products.”
Its costs did increase, as expected, due to new roles and wage inflation, marketing (including brand awareness in New Zealand), reinstatement of the employee short-term incentive program.
Trading update and outlook for the Baby Bunting share price
In the first six weeks of FY26, total sales increased 4.8%, with Australian comparable sales growth of 3.7% and NZ comparable sales growth of 13.9%.
It’s planning to refurbish between 10 to 12 locations for store of the future to be completed in FY26, with between five to six refurbishments completed in the first half.
The business also plans to open five new large format stores, and three small format pilot stores in the first half, with a further two to three more planned for the fourth quarter, depending on the success of the pilot stores.
Pro forma/underlying net profit is expected to reach between $17 million to $20 million in FY26, assuming full-year comparable store sales growth of between 4% to 6%. That would be net profit growth of between 40% to 65%.
This is the highest the Baby Bunting share price has been in over two years. But, it’s not as cheap as it was and I’m not sure whether its profitability can be sustained. Growth in private label and exclusive products could be key.
There are other ASX growth shares that I’d prefer to buy where competition may not be as strong.
