Baby Bunting lifted pro forma net profit 33.9% to a record on record sales, with gross margin hitting an all-time high, by protecting margin instead of discounting. Higher-margin repeat purchases and a growing owned online channel did the work a sale would have done. The lesson for operators is to value repeat customers and owned channels before reaching for a promotion.
The Take: Baby Bunting just posted a record year by doing the opposite of what most Australian retailers do when money is tight. It protected margin instead of buying sales with discounts, and profit jumped by a third. Look at where that growth came from before you sign off your next promotion.
The result: Baby Bunting lifted pro forma net profit 33.9% to A$16.1 million on record sales of A$556 million, with gross margin widening 100 basis points to a record 41.2%. This is not a result bought with price cuts. The retailer grew the gap between what it sells and what it pays while comparable store sales still rose 3.5%.
Baby Bunting's record FY26 gross margin, lifted while total sales still reached a record A$556 million
What it took: Two things carried the year, and neither was a discount. Higher-margin softgoods, the nappies and clothing parents buy on repeat, grew 12.9%. Online sales grew 16.7% and now make up 25.3% of the total, up from 23.1%, a channel the retailer owns rather than rents. Baby Bunting served more than 860,000 active customers over the year. Repeat buying and an owned channel did the work a sale would have done, without the damage to margin.
The counter: The reflex in a tight market is to cut price, and the cost of that reflex shows up in the data. Across the Australian businesses we score, the weakest performers lean hardest on discounts and lightest on the things that bring a customer back. Baby Bunting ran the other play, because it sells to parents who buy for years, so it put its money into margin and repeat purchase rather than a one-off traffic spike.
For Australian operators: Before you approve the next promotion, do three things. First, work out what a repeat customer is worth over a year, because that number is what justifies keeping them rather than discounting to win them once. Second, look at how much of your revenue runs through a channel you own, your site and your list, against one you pay to enter every time. Third, check whether margin is rising or falling as sales grow, because growth bought with discounts vanishes the moment the discount stops. Baby Bunting grew sales to A$556 million and its margin at the same time. That is the pairing worth copying.