UPDATE: The ASX small-cap stock Baby Bunting Group Ltd (ASX: BBN) is witnessing a remarkable resurgence, currently trading at $2.96. Following a robust performance report in August 2025, analysts are optimistic about the company’s trajectory in the coming years.
Baby Bunting, recognized as the leading specialist baby retailer in Australia and New Zealand, operates 75 stores across the region. The company’s market, valued at $6 billion, is showing strong growth and resilience, offering a promising outlook for investors.
In a significant turnaround, Baby Bunting reported a 4.7% increase in sales, totaling $521.9 million for FY25. Notably, the company’s gross profit margin improved by 340 basis points to 40.2%, while underlying net profit surged by 228% to $12.1 million. Statutory net profit skyrocketed to $9.5 million, reflecting a staggering 462% increase.
The balance sheet is also solidifying, with net debt reducing to $4.6 million in June 2025, a significant drop from $13 million the previous year. This financial health is critical as Baby Bunting gears up for a potentially explosive FY26.
As FY26 unfolds, early indicators are promising. In the first six weeks, total sales climbed by 4.8%, with Australian comparable sales up by 3.7% and New Zealand comparable sales skyrocketing by 13.9%. This momentum suggests that Baby Bunting is on track for yet another successful year, supported by a projected gross profit margin of 41%.
Looking ahead, the company plans to open five new large format stores and pilot three small format stores in the first half of FY26, with an additional two to three slated for the fourth quarter based on pilot success. The long-term strategy includes expanding to around 80 additional stores, which is expected to enhance profit margins significantly.
Analysts forecast the underlying net profit for FY26 to range between $17 million and $20 million, indicating at least 40% growth year-over-year. The earnings per share (EPS) projections suggest figures of 13.1 cents in FY26, 18 cents in FY27, and 22.4 cents in FY28. Currently, the stock is trading at 22x FY26 estimated earnings and 13x FY28 estimated earnings, signaling a potentially attractive investment opportunity.
The developments surrounding Baby Bunting are generating buzz among investors, with many considering the stock a bargain at $2.96. With the company on a solid growth trajectory, this may be the opportune moment for investors to capitalize on its expanding market presence.
Stay tuned as we continue to monitor Baby Bunting’s progress and market developments.
