Fund Manager Summary
The fund managers believe that Baby Bunting Group Ltd presents a significant growth opportunity despite recent challenges. With a national footprint and a deep product range, BBN is well-positioned in a market valued at over $5.0bn annually, with an addressable market of approximately $3.5bn. In their opinion, the new CEO’s initiatives to modernize customer engagement and expand into New Zealand can enhance customer experience and drive sales growth. The fund managers also note BBN's competitive advantages, including a wide product range and knowledgeable staff, which can help capture a larger market share. While they acknowledge inherent risks, such as execution failures and market penetration challenges, they see material upside over the next five years, making BBN an attractive investment despite its current valuation.
Source: Trading View
Commentary From The Managers
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Tyndall Asset Management
31 Oct 2025
$2.74
Summary
- Tyndall Asset Management initiated a position in Baby Bunting Group Ltd (BBN).
- Baby Bunting is a specialist retailer that faced challenges due to customer sensitivity to interest rate hikes.
- The company experienced execution mishaps impacting its performance.
- With a new CEO, Baby Bunting is undergoing a store refurbishment turnaround.
- The company is streamlining promotional activities and refocusing on basic retail execution.
- Tyndall Asset Management believes the green shoots of the new strategy are becoming evident.
- Coupled with a better macroeconomic backdrop, Baby Bunting presents a compelling investment opportunity.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Tyndall Asset Management
31 Oct 2025
$2.74
- Tyndall Asset Management initiated a position in Baby Bunting Group Ltd (BBN).
- Baby Bunting is a specialist retailer that faced challenges due to customer sensitivity to interest rate hikes.
- The company experienced execution mishaps impacting its performance.
- With a new CEO, Baby Bunting is undergoing a store refurbishment turnaround.
- The company is streamlining promotional activities and refocusing on basic retail execution.
- Tyndall Asset Management believes the green shoots of the new strategy are becoming evident.
- Coupled with a better macroeconomic backdrop, Baby Bunting presents a compelling investment opportunity.
Summary
HMC Capital
31 Oct 2025
$2.74
- Baby Bunting (-11.6%) provided a trading update at its AGM, reaffirming FY26 NPAT guidance of $17-20 million.
- Comparable sales growth remains strong, up +5.6% YTD after adjustments for refurbished stores.
- Gross margin increased to ~40.6% from 40.2%.
- Refurbished Store of the Future sites are achieving ~30% sales uplifts.
- Two ‘Junior’ small-format pilots are now operational in Robina (QLD) and Plenty Valley (VIC), with a third planned for Adelaide (SA).
- HMC Capital views the AGM update as consistent with their turnaround thesis.
- Comp sales growth and margin improvements are evident, with refurbishment uplifts enhancing store productivity.
- Despite the October pullback, Baby Bunting’s share price is still up +63% in 2023.
- HMC Capital continues to see further upside for the stock driven by:
- Store refurbishments
- Expansion of the store network
- Small format store pilots
- Operating leverage
- Growth in retail media business
- Positive earnings contribution from NZ in FY27
Summary
Pendal Group
30 Sept 2025
$3.10
- Pendal Group continues to hold Baby Bunting Group Ltd (BBN) following a strong FY25 result.
- FY25 earnings exceeded guidance and consensus expectations.
- FY26 guidance is notably strong, surpassing market expectations.
- Growth is supported by improvements in sales and margin expectations.
- The market perception of Baby Bunting has shifted from a mature retailer to a category leader with a clear growth pathway.
- Future growth is driven by further store rollouts, new store formats, and expansion into New Zealand.
Summary
Elston Asset Management
30 Sept 2025
$3.10
- Elston Asset Management notes that Baby Bunting’s turnaround is progressing positively.
- The improvements from newly refurbished stores are exceeding expectations.
- This turnaround provides strong visibility for growth in both sales and earnings.
- Elston Asset Management continues to hold due to the ongoing updates to the store network in the coming years.
Summary
HMC Capital
30 Sept 2025
$3.10
- Baby Bunting was a strong contributor to portfolio performance during the quarter, up ~68% following the release of its FY25 results in August.
- The results reinforce the turnaround strategy supported by HMC Capital, with gross margin reaching 40.2%, ahead of the 40% target.
- Despite the positive share price response, HMC Capital continues to see further upside.
- The refurbishment program is encouraging, with the first three sites reporting average sales growth of ~28% vs the pcp.
- HMC Capital targets 10-15 more refurbishments each year to enhance performance.
- Store rollout momentum is building, with eight openings planned in FY26 (five large formats and three small format pilots).
- As the network expands and refurbished stores generate stronger sales, scale benefits are expected to improve the cost base and support margin expansion.
- Gross margins are anticipated to improve as renegotiated supplier agreements annualise and retail media grows.
- The sales mix is shifting towards private label and exclusive products, particularly in new formats.
- HMC Capital believes the market is underestimating the compounding effect of these drivers and the operating leverage as the store network grows.
- There is a path for Baby Bunting to return to ~10% EBITDA margins, representing a step-change in earnings power from the current ~5% base.
- HMC Capital expects this to drive further value creation and a meaningful re-rate.
Summary
1851 Capital
19 Sept 2025
$3.13
- 1851 Capital continues to hold a positive outlook on Baby Bunting Group Ltd.
- Mark Teperson, the new CEO, has been in the role for two years and is implementing effective strategies.
- The company has refurbished three stores, resulting in a revenue increase of over 25% in those locations.
- Plans are in place to refurbish an additional 10 to 12 stores in the current financial year.
- Baby Bunting is rolling out smaller format stores and expanding its range of exclusive and private label products.
- The share price has already increased by 50% following these positive developments.
- 1851 Capital believes Baby Bunting has the potential for further growth.
Summary
HMC Capital
31 Aug 2025
$2.83
- Baby Bunting (+50.0%) reported FY25 NPAT at the upper end of its guidance.
- Outlook for FY26 is materially ahead of consensus expectations.
- The turnaround strategy supported by HMC Capital is being successfully delivered by the refreshed management team.
- Positive tailwinds from strengthening consumer spending are contributing to performance.
- HMC Capital made its investment in Baby Bunting in mid-2024 during a period of declining sales and narrow margins.
- Consumer sentiment was at historic lows when the investment was made.
- Belief in Baby Bunting’s turnaround potential as a category killer retailer with significant growth runway was key to the investment thesis.
- The investment has delivered an unrealised return in excess of 80% in less than 18 months.
- HMC Capital continues to see meaningful opportunities for future growth and returns as the store refurb and rollout plan progresses.
- Further insights on the Baby Bunting investment thesis can be found in our Livewire article.
Summary
SG Hiscock & Company
31 Aug 2025
$2.83
- Baby Bunting (BBN) is the largest participant in the retail sector for baby products.
- SG Hiscock & Company has long anticipated BBN's potential to become a dominant franchise in this segment.
- Execution has previously fallen short of this potential, leading SG Hiscock & Company to monitor from the sidelines.
- New CEO Mark Teperson, appointed two years ago, has a clear plan to enhance the parent offering and customer value proposition.
- SG Hiscock & Company supports the CEO’s vision and early progress observed since their investment earlier this year.
- The August update confirmed improved performance, driven by increased sales and profit growth.
- BBN is advancing with a 'store of the future' revamp, aiming for a strong sales cadence and improved profit margins.
- This strategic direction has been positively received by investors.
Summary
Pendal Group
31 Aug 2025
$2.83
- Pendal Group notes that Baby Bunting (BBN) has been a significant contributor to performance, with a return of +50.2%.
- The company's FY25 earnings were at the top end of guidance and exceeded consensus expectations.
- A key highlight is the FY26 guidance, which is notably above market expectations.
- This positive outlook is driven by enhancements in both sales and margin expectations.
- The market perception of Baby Bunting has shifted from a mature retailer to a category leader with a clear growth pathway.
- Growth strategies include further store rollouts, new store formats, and gradual expansion into New Zealand.
Summary
Firetrail Investments
31 Aug 2025
$2.83
- Firetrail Investments observes that Baby Bunting Group Ltd has sharply outperformed following FY25 results.
- Management reported that refurbished stores are performing +28% compared to the prior year.
- There has been a 3.4% expansion in gross margins.
- There is potential for continued gross-margin repair and operating leverage if category demand remains resilient.
- Baby Bunting is positioned to achieve >30% returns on store refurbishments over the next five years.
- This strategy is expected to drive strong profit growth and ongoing rerating.
Summary
HMC Capital
30 June 2025
$1.84
- Baby Bunting ended the quarter up 4.5%.
- The company’s turnaround remains on track, reaffirming full year guidance in early May.
- Gross margin has improved, meeting the FY25 target of 40% (YTD to 27 April 2025).
- Continues to target a return to +10% EBITDA margin.
- Following the successful launch of the new Store of the Future in April, Baby Bunting re-opened two additional refurbished stores in Victoria and South Australia in June.
- Plans to refurbish a further 8 – 12 stores in FY26.
- Each refurbished store is targeting >10% comp store sales growth.
- Sales revenue growth is expected through FY26, alongside network expansion with the addition of 5 – 8 new large format stores and 3 pilot small format stores.
- Sales growth should also be supported by expected interest rate cuts and broader enhancements to Baby Bunting’s ranging and marketing.
Summary
Oracle Advisory Group
30 June 2025
$1.84
- Oracle Advisory Group updates their investment thesis on Baby Bunting Group Ltd.
- Baby Bunting has seen a 1.2% increase under new CEO leadership.
- Significant strides include store refurbishments and a rollout of smaller-format stores in high-traffic areas.
- Efforts are underway to restore gross profit margins to >40%.
- These initiatives position the company for a positive outlook following recent challenges.
Summary
HMC Capital
31 May 2025
$1.70
Summary
Elston Asset Management
31 Mar 2024
$2.04
- Baby Bunting (BBN) is the only specialty baby goods retailer with a national footprint in Australia, founded in 1979.
- BBN offers a wide range of products for children from newborn to three years, including prams, car seats, furniture, and more.
- As of December 2023, BBN operates 74 stores (70 in Australia, 4 in New Zealand) with aspirations to reach 120 stores.
- The domestic baby goods market is valued at over $5.0bn annually, with BBN targeting a $3.5bn addressable market, holding about 15% market share.
- Elston continues to hold BBN despite challenges, including revenue growth and gross margin weakness due to supply chain issues and changing consumer behaviors.
- BBN's share price has declined to $2.10 from an initial $3.20 since being added to the portfolio in June 2020.
- Management has opened 10 new stores in Australia and 4 in New Zealand since July 2022, although these stores are yet to reach revenue maturity.
- The transition to a new CEO is viewed positively, with a focus on modernizing customer engagement and expanding in the NZ market.
- Competitive advantages include a wider product range, exclusive offerings, and knowledgeable staff, with limited competition in the domestic market.
- Elston adopts conservative assumptions for BBN, projecting mid-single digit sales growth and a return to historic EBIT margins over the next 5 years.
- Risks include potential failure in executing strategic initiatives and meeting expansion expectations, particularly in New Zealand.
- Despite recent challenges, Elston believes BBN can drive revenue and profit growth over the long term, considering its strong brand and market position.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"In a landscape where Baby Bunting seems poised for growth, the challenges of the past few years could be the crucible for innovation. If the new management can harness their strategic vision, we might just witness a renaissance in the baby goods market."
Last Updated: 31 Oct 2025
Query The Data
Frequently Asked Questions
Who is investing in Baby Bunting Group Ltd (ASX:BBN)?
Fund managers including Elston Asset Management, HMC Capital, Oracle Advisory Group, 1851 Capital, Firetrail Investments , SG Hiscock & Company and Pendal Group have invested in Baby Bunting Group Ltd (ASX:BBN).
Why do fund managers invest in Baby Bunting Group Ltd?
Fund managers invest in Baby Bunting Group Ltd due to its unique position as the only national specialty baby goods retailer in Australia, capturing approximately 15% of a lucrative $5 billion market with 300,000 new births annually. Despite recent challenges, including supply chain issues and profit margin pressures, the new CEO's strategic initiatives aim to enhance customer engagement, expand into New Zealand, and modernize the product range. With a robust growth forecast and plans to increase store locations, fund managers see potential for revenue and profit growth over the next five years, making it a compelling investment despite inherent execution risks.
What happened to Baby Bunting Group Ltd (ASX:BBN)?
Fund managers are investing in Baby Bunting Group Ltd due to a successful turnaround strategy led by CEO Mark Teperson. Recent store refurbishments have resulted in significant sales increases, with refurbished stores reporting over 25% revenue growth. The company is expanding its store network and introducing new formats, which are expected to enhance profitability and market position. With improved gross margins and strong FY26 guidance, Baby Bunting is viewed as a category leader with substantial growth potential, making it an attractive investment opportunity.