Shares in Baby Bunting Group Ltd (ASX: BBN) rocketed to 52-week highs in morning trade after the maternity and baby goods retailer unveiled its FY25 results.
At the time of writing, shares in the ASX retail stock are trading at $2.43 apiece – up by 31% from yesterday's closing price of $1.85.
For context, the All Ordinaries Index (ASX: XAO) is trading flat at the same time.
This price surge has now seen Baby Bunting shares deliver a 67% return for investors over the last twelve months.
Without further ado, let's find out how the year unfolded for the company.
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FY25 results in focus
Baby Bunting reported a series of notable outcomes in FY25.
Sales of $521.9 million hit a new record after rising by 4.7% from the previous year, supported by comparable store sales growth of 4.2%.
Management noted that sales were strong across all key categories.
Sales in soft goods – such as clothes and toys – were the standout as the company's Store of the Future rollout continued to build momentum. Here, the group reported a 24% rise in transactions and a 6% increase in basket sizes.
This recently launched growth initiative features updated store layouts. It is designed to enhance customer experience and boost sales.
All up, the Store of the Future refurbishment program delivered a 28% jump in sales across three stores opened in FY25.
Elsewhere, new customer acquisitions grew by 6.2%. Management attributed this performance to the group's refreshed value proposition and marketing approach.
Total active customers ended FY25 at 828,000 – up by 4.5% on last year.
Meanwhile, the company's gross margin of 40.2% increased by 340 basis points year-on-year, exceeding a previously reported target of 40%.
In turn, net profit after tax (NPAT) on a pro-forma basis clocked in at $12.1 million. This robust performance equates to a 228% surge from twelve months prior.
Baby Bunting also reported a strong improvement to its bottom line.
Net debt at the end of June came in at $4.6 million, down from $13 million at the same time last year.
However, the board of directors opted not to pay a dividend for FY25.
Instead, the ASX retail stock intends to use its improved balance sheet to support its ongoing growth strategy.
Baby Bunting's CEO, Mark Teperson, said:
We're pleased to deliver a strong FY25 result – with our profit landing at the top end of our guidance range, and a record sales figure – validating the effectiveness of our strategy. Further, in a challenged consumer environment where gross margins have been under pressure, we have delivered 340 bps of improvement, reflecting our disciplined execution. Gross margin of 40.2% was a record for the business.
What next for this ASX retail stock?
Looking ahead, Baby Bunting is targeting up to 12 Store of the Future refurbishments in FY26.
It also plans to open five new large format stores and three small format pilot stores in the first half of FY26.
A further two or three small format stores could be on the cards in the fourth quarter of the fiscal year, should the pilot stores prove to be a success.
All up, Baby Bunting is guiding for pro-forma NPAT to range between $17 million and $20 million in FY26.
This outlook assumes store sales growth of between 4% and 6% for the year, and a gross margin of 41%.
Capital expenditure of between $30 and $35 million is expected to be fully funded through operating cash flow.
