Half Year 2026 Step One Clothing Ltd Earnings Call Transcript
Key Points
- Indirect revenue through third-party channels like Amazon and John Lewis increased by 75.9%, representing nearly 20% of total revenue.
- The company successfully launched new products such as socks, pajamas, and women's period products, which have been well-received by customers.
- Customer acquisition numbers remain healthy, with the customer database exceeding 2 million for the first time.
- Step One Clothing Ltd (ASX:STP) maintains a strong balance sheet, operating debt-free with $24 million in cash and financial assets.
- The company is focusing on channel diversification and international expansion, particularly in the UK and US, to build a stronger long-term presence.
- Sales and profitability for the first half were below expectations, with revenue down 24.5% compared to the same period last year.
- A one-off $10.9 million inventory provision negatively impacted profitability, reducing reported gross margin to 43%.
- Advertising costs increased to 31.2% of revenue, despite a $2.6 million reduction in absolute terms.
- Distribution and fulfillment costs rose to 20.6% of revenue due to elevated inventory levels and the introduction of an additional 3PL.
- The company reported an adjusted EBITDA of $1 million, significantly lower than the $11.2 million in the prior period, resulting in a reported EBITDA loss of $10 million.
Thank you for standing by and welcome to the Step One Clothing Limited Half Year 26 financial results. (Operator Instructions)
I would now like to hand the conference over to Mr. Greg Taylor, CEO and founder. Please go ahead.
Good morning, everyone. Welcome to step one's first half 26 results conference call. I'm Greg Taylor, CEO and founder of Step One. I'm joined by our CFO Nigel Underwood.
We're going through the presentation that was launched this morning, the [VAX], and there'll be time for questions at the end.
Turning to side 2.
It's been a challenging period, and sales and profitability for the first half came in below expectations. The softer headline sales can be largely attributed to, our strategic pivot away from deep discounting during sale periods to restore our brand equity and slow and slower than expected clearance of legacy inventory, despite our efforts to clear this product through promotional activity.
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