Baby Bunting Group (BBN.AX): Relatively less discretionary retailers are seeing a slowdown, imagine the challenges facing more discretionary retailers

Research evidence excerpt

Baby Bunting Group (BBN.AX): Relatively less discretionary retailers are seeing a slowdown, imagine the challenges facing more discretionary retailers

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23 Jun 2026 20:59:04 ET │ 11 pages

Baby Bunting Group (BBN.AX)

Relatively less discretionary retailers are seeing a slowdown, imagine the

challenges facing more discretionary retailers

CITI’S TAKE Buy

Over the last few weeks, a number of investors have sounded more open Price (23 Jun 26 16:00) A$1.65

towards rotating into discretionary retail based on a thesis that interest Target price A$3.30

rates have peaked. We think the magnitude of today’s Baby Bunting

Expected share price return 100.0% downgrade might make some of them nervous given i) the exit sales run-

rate into FY27 is deteriorating (which suggests downside risk to FY27 Expected dividend yield 0.0%

estimates), ii) this category should be relatively non-discretionary and Expected total return 100.0%

more discretionary retailers might be seeing a greater slowdown. We are Market Cap A$223M

also conscious that Baby Bunting will be cycling a reasonably challenging US$157M

trading update for the first 6 weeks of FY27 (comps of 5%) when it reports

in August and the reduction in HMC’s ownership stake in recent months

(17% to 15% to 13%) might be seen as an overhang on the stock.

Sam TeegerAC

+61-2-8225-4319Other points

sam.teeger@citi.com

Eileen Li

High single digit NPAT downgrade. FY26 Proforma NPAT guidance of $16 million to

$17 million is -8% below VA Consensus and CitiE at the midpoint. It is also -11% below

the midpoint of previous guidance. Weakness appears to be driven by:

• A deterioration in sales momentum. We estimate LFL sales growth for the final

19 weeks of 2H26 should slow to 0.7%, down from 6.7% for the first 7 weeks of

2H26.