Full Year 2026 Step One Clothing Ltd Earnings Call Transcript
Key Points
- Adjusted gross margin remained strong at 75.9%, only 0.5% below FY25, despite reduced discounting.
- Indirect channel revenue grew 62.3% and now represents 18.2% of total revenue, with profitable and disciplined expansion.
- New customer acquisition improved in H2, with new customers making up 47% of orders, up from 36% in H1.
- The company is debt-free with $25.8 million in cash and financial assets, providing a solid financial foundation.
- The U.K. market showed resilience, with revenue down only 11.1% compared to a 36.1% decline in Australia, and now represents 41% of group revenue.
- Revenue declined 26.7% to $63.7 million, with a significant drop in Australia and below-expectations performance in the women's range.
- Reported EBITDA loss was $7.4 million, with adjusted EBITDA profit of only $1.7 million, down from $17.4 million in FY25.
- Inventory obsolescence provision of $9.1 million weighed on results, and inventory on hand increased during the year.
- Conversion rate moderated to 4.1% from 4.6% in FY25, and advertising spend rose to 33.1% of revenue, up 6.1 percentage points.
- Operating cash flow was an outflow of $2.7 million, and dividends were suspended until retained earnings return to positive.
Thank you for standing by, and welcome to the Step One Clothing Limited FY '26 Financial Results. [Operator Instructions] Finally, I would like to advise all participants that this call is being recorded.
I'd now like to welcome Greg Taylor, Founder and CEO, to begin the conference. Greg, over to you.
Good morning, everyone. Welcome to Step One's FY '26 Results Conference Call. I'm Greg Taylor, CEO and Founder of Step One. I'm joined by our CFO, Nigel Underwood. We'll go through the presentation that was lodged this morning to the ASX, and there will be time for questions at the end.
Turning to Slide 2, results highlights. FY '26 was a year of deliberate change for Step One. We set out the half to reset the business, and the full year result reflects both the impact of that decision and some early indicators of progress against that reset program. Revenue for the year was $63.7 million, down 26.7% on FY '25. As we talked in February, the reduction in
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