Baby Bunting Group Ltd (ASX:BBN) (Q1 2026) Earnings Call Highlights: Record Sales and Strategic …

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Tue, February 17, 2026 at 2:00 PM GMT+9 4 min read

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**Total Sales Growth:** 6.7% increase year-on-year.

**Comparable Store Sales Growth:** 4.7% for the half, with 5.7% excluding refurbishment disruptions.

**Gross Margin:** Record 41%, up 124 basis points.

**Pro Forma NPAT:** $5 million, midpoint of guidance.

**Underlying NPAT:** $7.2 million, up 44%.

**Online Sales Growth:** 18% year-on-year, representing 24.8% of total sales.

**New Zealand Comparable Store Sales Growth:** 16.5% for 1H, 17.8% in early 2H.

**Store Refurbishments:** Six stores refurbished, average sales uplift of 25%.

**New Store Openings:** Two new large-format stores and three Baby Bunting junior pilot stores.

**Net Debt:** $21.1 million.

**Cash Conversion Ratio:** 70.9%.

**CapEx:** $25.9 million for 1H, full year expected $41 million to $43 million.

**Marketing Investment:** Increased by $1.8 million, now 2.7% of sales.

**Retail Media Business:** Tracking to plan at 1% of sales, targeting $2 million to $3 million gross margin contribution for FY26.

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Release Date: February 16, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Baby Bunting Group Ltd (ASX:BBN) reported record sales growth of 6.7% and a record gross margin of 41%, reflecting strong execution of their strategy.

The Store of the Future program has shown promising results, with refurbished stores delivering an average sales uplift of 25%, at the top end of their target range.

Online sales, including Click & Collect, grew by 18% year on year, now representing 24.8% of total sales, driven by same-day and next-day delivery options.

The company has made significant operational progress, including the opening of two new large-format stores and the launch of three Baby Bunting junior pilot stores.

Baby Bunting Group Ltd (ASX:BBN) has entered into a new three-year exclusive partnership with Stokke, a premium children's product brand, enhancing their product offerings.

Negative Points

The company incurred additional costs in Q2, including higher makewood costs and compliance costs, impacting their financials.

Two of the three small format pilot stores are underperforming in terms of sales expectations, indicating challenges in converting passing traffic into in-store shoppers.

The CapEx for the first half was higher than anticipated due to prioritizing speed to market, resulting in increased build costs.

The company faces challenges in optimizing stock availability and replenishment in refurbished stores to further drive sales performance.

Inflation and wage increases have impacted the cost of doing business, although mitigated through optimization efforts.

 






Story Continues  

Q & A Highlights

Q: The sales uplift from store refurbishments seems impressive, reaching the top end of your range. How can you leverage learnings from these refurbishments to potentially exceed the 25% uplift? A: We track customer behavior metrics across our refurbished stores, including active customer rates and spend profiles. While there is variability, these insights help us identify areas for improvement. We are optimistic that with our data and analytics investments, we can continue to optimize performance, although the range of performance may vary as we expand into different catchments.

Q: Can you explain the phasing of sales growth post-refurbishment? How soon do you reach peak sales growth, and how long is it sustained? A: The 15% to 25% sales uplift is expected within the first year post-refurbishment. While this moderates over time, the consistency of performance across our refurbished stores indicates they are performing well within our target range.

Q: Regarding the small format stores, the two underperforming storesare they below expectations in terms of sales or EBITDA? A: The underperformance is at the sales line. The key issue is converting passing traffic into store visits. Despite this, in-store conversion rates are high, and we are working on optimizing these locations to improve performance.

Q: What are your expectations for the cost of doing business (CODB) in the second half, and what potential leverage do you foresee in future periods? A: We anticipate seeing CODB leverage in the second half and beyond as we introduce more refurbished stores and expand our network. While we initially expected modest leverage, it will likely be flat year-on-year due to increased depreciation from additional CapEx investments.

Q: Can you elaborate on the changes in CapEx outlook for the full year and what has driven the increase? A: Originally, we projected CapEx between $30 million and $35 million, net of landlord contributions. The increase is due to prioritizing speed to market for store refurbishments and new store rollouts, resulting in higher initial costs but maintaining sub-three-year paybacks.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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