Lean operations and good demographics drive global retail success
- Wed 21 October 2026
- 5 MIN READ
Three ASX-listed businesses are defying broader consumer headwinds, pursuing profitable growth paths at home and abroad.
Bell Financial’s Grady Wulff setting the scene for the retail sector at ASX SMIDcaps.
All three presented at the September 2026 ASX SMIDcaps Conference, run by ASX in partnership with Bell Financial Group, to a full house of investors and advisers at the State Library of NSW. The popular twice-yearly event features CEOs and presenters from small and mid-cap ASX listed companies.
Australia’s answer to IKEA goes overseas
With gross margins above 65% and a direct-to-consumer model that needs little capital, Koala is expanding into a new international market every year. In 2015, co-founders Dany Milham and Mitch Taylor set out to build an IKEA for the 21st century, bringing Australian design to the world.
Starting with mattresses before moving into sofa beds and sofas, Koala operates in Australia, Japan, the UK and the US and listed on ASX in March 2026.
“We were fascinated by IKEA exporting Sweden to the world. We wanted to export Australian design and the Australian ethos,” says Dany Milham, Chief Executive Officer and co-founder, Koala.
In FY26, Koala's first result as a listed company, revenue grew 24% in constant currency and 20% in Australian dollars. Gross margin was 65.3%, contribution margin 26% and EBITDA margin was 8.4%. Half Koala's revenue came from outside Australia in FY26, with this figure since rising to 60% in the first eight weeks of trading in FY27.
The Koala Company CEO Dany Milham presenting at the ASX SMIDcaps Conference
Its small, 20-product range is designed in-house in Sydney by around 36 product developers. Every product comes with a 120-day trial and feedback from returns goes into new versions of its products. An example of this was a sofa bed that was launched in 2020 is now in its fourth generation and its gross margin has risen substantially over that period, while accommodating product improvements.
“We launched the UK in September 2025 with one employee on the ground. With our global support infrastructure, AI and the tools available to our teams, in the launch phase of a new market one person can do every role,” says Milham.
The three-year-old US business is now at A$75 million revenue and has around 15 staff. Milham says the addressable market opportunity in the US is enormous.
Koala's next growth push will come from its sofa and seating business, a category with plenty of potential.
A wholly new opportunity
SkinKandy’s strong balance sheet and store economics mean it can fund a store rollout across Australia and New Zealand and open in South Africa in the second half of FY27. The company listed on ASX in May. More than 15,000 piercings are performed each week across its 115 company-owned stores in shopping centres.
“We are Australia and New Zealand’s leading piercing specialist and we’re dedicated to creating the world’s most trusted piercing brand,” says Carl Larzabal, Chief Financial Officer, SkinKandy.
SkinKandy CFO Carl Larzabal takes the stage at the ASX SMIDcaps Conference
In FY26, SkinKandy's first set of results as a listed company, it produced revenue of A$90.2 million and NPAT of A$9 million, beating its prospectus on nearly every key metric. Piercing services make up 52% of revenue, aftercare 9% and fashion jewellery 39%. SkinKandy only sells jewellery for the piercings it provides and its KandyClub loyalty program has more than 1.1 million members.
Every team member is a trained piercer and the company has around 850 piercers. “If another business were to look to replicate needle piercing at scale, say a 100-store network, they would need to go out and find 750 to 800 piercers and that is a tangible barrier,” says Larzabal.
After opening 50 stores in two and a half years, SkinKandy estimates the Australian and New Zealand market could support 180 to 210 piercing stores and is targeting 15 to 20 new stores a year, after opening 22 last year and 21 the year before.
Baby business bolstered for the future
With a A$6.3 billion potential addressable market across Australia and New Zealand, Baby Bunting is using record gross margins to fund a refresh of its store network. The national specialty baby retailer has 81 stores across Australia and New Zealand and has identified 120 store opportunities from more than 14 years of catchment mapping.
FY26 was the second year of a growth strategy Baby Bunting released at the end of FY24, and it has delivered record sales and record gross margin for two years. Total sales rose 6.5% to A$556 million in the period, with comparable sales up 3.5%, despite a very challenging second half for retail. Gross margin improved by 100 basis points to 41.2% and pro forma NPAT rose to A$16.1 million.
Baby Bunting CEO Mark Teperson presenting at the ASX SMIDcaps Conference
Retail media, launched over the past 12 months, generated A$5.8 million in revenue at close to pure profit. The company also grew its private label and exclusive brands business, signing baby highchair category leader, Stokke, during the year. In New Zealand, exiting third-party logistics has taken Baby Bunting to break-even in this market and it expects to reach profit from FY28.
Demographic trends should support the company looking ahead, with Australia recording a consistent 290,000 to 300,000 births a year for the past decade. The latest Intergenerational Report expects births to grow by 15% between now and 2060, driven by immigration.
“People are always having babies, so the need to buy a car seat, pram, cot or furniture will always exist. We are not immune to the macro environment, but we are positioned to trade through these things,” says Baby Bunting Chief Executive Officer, Mark Teperson.
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