Step One Clothing (STP) investor relations material

Executive summary

• Revenue reached $86.9 million, up 2.8% year-over-year, despite a challenging retail environment and increased promotional activity.

• EBITDA was $17.4 million, representing 20.1% of revenue, down 3.9% year-over-year.

• Gross margin declined to 76.4% from 80.8% due to higher discounting and value-driven promotions.

• Australian business remained steady with strong brand awareness, while the UK showed promising momentum; US market de-prioritized.

• Continued expansion in women's and indirect channels, with women's now 15% of revenue and indirect channels growing 53%.

Financial highlights

• Revenue increased by $2.3 million to $86.9 million, with Australia and UK growing 7–7.6% and 8.7–9% respectively; US revenue declined.

• Gross margin declined, but advertising costs reduced to 27% of revenue from 32–32.7% last year.

• Net profit after tax increased 2% to $12.7 million.

• Amazon revenue grew 35% to $6 million, now 7% of total revenue; indirect channels represent 8% of revenue.

• Final dividend of $0.24 per share fully franked, with total dividends of $13–13.3 million paid, maintaining a 100% payout rate.

Outlook and guidance

• FY 2026 EBITDA expected in the range of $10–12 million, reflecting increased advertising and investments in brand building and inventory optimization.

• Modest growth expected, led by the UK, women's, and new product categories.

• Focus on new product launches, lower base prices, and targeted promotions to drive customer acquisition.

• Personnel expenses to rise due to recent hires, with further hiring constrained.

• Moderate revenue growth expected, with a focus on reducing reliance on sale periods and restoring gross margins.