Step One Clothing Ltd (ASX:STP) Half Year 2026 Earnings Call Highlights: Navigating Challenges …

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Wed, February 18, 2026 at 2:02 PM GMT+9 3 min read

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**Revenue:** $36.3 million, down 24.5% compared to the same period last year.

**Gross Margin:** 73.2% on an adjusted basis, down 4.8 percentage points; reported gross margin at 43% due to a $10.9 million inventory provision.

**EBITDA:** Adjusted EBITDA at $1 million; reported EBITDA loss of $10 million.

**Direct and Indirect Revenue Growth:** Up 75.9% year-over-year, representing 18.3% of total revenue.

**Advertising Costs:** Increased to 31.2% of revenue, despite a $2.6 million reduction in absolute terms.

**Distribution and Fulfillment Costs:** Increased to 20.6% of revenue.

**Cash and Financial Assets:** $24 million held at the end of the period.

**Operating Cash Flow:** Outflow of $1.4 million, compared to an inflow in the prior period.

**Dividends:** $4.4 million paid, down 14.5% from the previous period.

**Customer Database:** Exceeded 2 million for the first time.

**Order Average Value:** $93 with a 65% return rate.

**Conversion Rate:** 4.7%, considered strong by industry standards.

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Release Date: February 17, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive 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.

Negative Points

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.

 






Story Continues  

Q & A Highlights

Q: Can you explain why revenue exceeded the guidance provided in December despite the overall disappointing results? A: Nigel Underwood, CFO: The guidance in December did not account for all sales from the Black Friday sale, and Christmas sales continued strong. This resulted in a slightly more optimistic outlook than initially expected.

Q: How did the UK market perform compared to other regions, and what changes have been made in the past year? A: Greg Taylor, CEO: The UK market fared well due to a focus on indirect channels, which increased nearly 80%. We localized content to fit the market and saw growth in indirect channels like Amazon and TikTok Shop.

Q: Can you discuss the initial feedback and traction of the new product adjacencies launched during the half? A: Greg Taylor, CEO: The new products, including pyjamas and socks, have been well-received, with socks selling out initially. These products provide innovation and open doors to further adjacencies.

Q: What regions contributed most to the increase in indirect revenue, and how are other channels like TikTok Shop performing? A: Nigel Underwood, CFO: Most growth in indirect revenue came from the UK, where TikTok Shop was launched. Amazon also showed strong growth across markets.

Q: Can you provide details on logistics costs and the introduction of additional 3PLs? A: Nigel Underwood, CFO: Additional 3PLs were introduced in the UK and Australia to address delivery schedule issues, resulting in a small additional cost due to large inventory volumes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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