Step One Clothing (STP) H2 2025 earnings summary

Executive summary

• Achieved revenue of $86.9 million, up 2.8% year-over-year, and maintained profitability despite a challenging retail environment driven by cost of living pressures and increased promotional activity.

• EBITDA was $17.4 million, representing 20.1% of revenue, slightly down from the previous year.

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

• Strategic focus on product innovation, customer acquisition, indirect channel growth, and international expansion, with the U.K. as the near-term growth driver.

• Continued expansion in women's and indirect channels, with respective revenue growth of 8% and 53%.

Financial highlights

• Revenue reached $86.9 million, up 2.8% year-over-year, with Australia and U.K. growing 7.6% and 8.7% respectively; U.S. revenue declined.

• EBITDA was $17.4 million, slightly down from the previous year; net profit after tax increased by 2% to $12.7 million.

• Gross margin declined to 76.4% due to higher discounting and promotional activity.

• Advertising costs reduced to 27% of revenue, down from 32% last year.

• Cash and term deposits totaled $33.1 million; final dividend of $0.024 per share, fully franked, with total dividends of $13.3 million paid, maintaining a 100% payout rate.

Outlook and guidance

• FY26 EBITDA expected in the range of $10 million–$12 million, reflecting deliberate investments in brand building, inventory optimization, and increased advertising.

• Modest revenue growth anticipated, with the U.K., women's, and new product categories as primary growth drivers.

• 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.

• Focus on reducing reliance on sale periods and restoring gross margins to historic levels.