Step One Clothing Limited

ASX:STP

Step One Clothing Limited

ASX:STP
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$0.265 (-11.7%)
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#362
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2
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Reports (1) My Report Forum Investors
Forum Topics STP STP FY25 E & 2025 Annual Report

Pinned straw:
raymon68
Added 4 months ago

FY25 Overview Step One continues to deliver strong financial results. The highlights include: ■ Revenue: $86.9 million, up 2.8% on pcp (FY24: $84.5 million) ■ EBITDA: $17.4 million, down 3.9% on pcp (FY24: $18.1 million) ■ Net profit: $12.7 million, up 2.0% on pcp (FY24: $12.4 million) ■ Cash and financial assets: $33.1 million and no debt Throughout the year, we adapted quickly to challenging market conditions, using promotional periods strategically to align with consumer behaviour and managing our advertising spend efficiently. While average order value grew, gross margins were impacted by the increased promotional activity required to maintain market share in a tough environment

Cash and cash equivalents at the end of the financial year 9 18,140 28,952  

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STP a wealth destroyer - So see how the STP strategy goes now... and the investor Buy, Hold , Sell..!

Return (inc div)   1yr: -58.37%   3yr: 31.27% pa   5yr: N/A



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mushroompanda
Added 4 months ago

I'm not following this one as deeply as I used to, and won't be revisiting the results for a while yet. So I'm going to shoot from the hips on my interpretation of what has happened.

The company has admitted that it has been highly dependent on discounting, which is not sustainable, and now requires a complete pivot to the strategy.

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They've bulk discounted their way to "success", by offering aggressively discounted bulk deals during the multiple sales periods during the year. In this set of results, they've ceased reporting "average revenue per item" and "items per order".

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All the while, the number of new and returning customers have been stagnant for the past 4-5 years.

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During the conference call this morning the CEO disclosed that in FY25, 63% of revenue occurred during the sales period. Up from 35% in FY24! Wowwweee!

Despite the dire FY26 EBITDA guidance of $10-12m (down from $17.4m), I wouldn't rule out further downgrades.

Why? Only 37% of FY25 revenue came outside sale periods. STP has conditioned customers to wait for heavy discounts, and management now plans to unwind that behaviour in FY26. That transition could be painful - especially if upcoming sale events offer thinner discounts as expected and shoppers stay away.

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PortfolioPlus
Added 4 months ago

FY25 Results

 The FY25 results reflect revenue gains of 2.76% - but this masks the % improvements in their main markets – Australia revenue up by 7.5% and UK revenue up by 8.8%. The US market fell significantly in FY26 from $$6.5m to just $2.7m because of the decision to significantly scale back marketing to this area. It will become an irrelevancy in FY26

 Somewhat pleasing was the 67% revenue from returning customers - up from 63% in FY24.

 Whilst the company flags falling gross margin, because the marketplace has cottoned onto the huge discount sales they operate, I think a better benchmark is to review the revenue as against the contribution margin (net margin after one deducts the costs of goods sold plus the costs of sales specifically, merchant fees, distribution costs and marketing and advertising).

 Looked this way, the fall wasn’t that great. These costs were 69.5% of revenue in FY25 and 68.6% in FY24 – but they did signal out that the sale of slower-moving inventory at promotional pricing is expected to see FY26 contribution costs at 71% in line with 2H25 levels.   

 Where costs have ballooned is in labour costs and share based payments at 7.6% of revenue in FY25 and just 5.5% in FY24.  I find it totally over the top to be paying the CFO some $720k for a company the size of STP. He alone is 11% of the entire wages bill. Give me a cheaper bean counter and a more high-powered sales/marketing person every day of the week, at the very least, you will have more beans to count. Going forward into FY26 they are stating that wages will be even higher in FY26 because of recent hires.

 Cash flow was a huge miss with inventory ballooning by $6.3m. In FY24, cash ops were 147.6% of NPAT + D&A versus a miserly 61.6% in FY25.

 Yes, an underwhelming 2H was a dampener on the FY25 results, even so, a ROE of 24% and a ROCE of 35% isn’t to be sneezed at – particularly when it is such an asset light company.

What really put the ‘collywobbles’ under the market today was management’s outlook for FY26 where they see a massive 41% reduction in EBITDA from $18.7m in FY25 to median average of $11m for FY26. This is almost ‘skid mark territory’ and infers FY26 revenue around $55m. In the parlance of their product range, I believe they are being super conservative by donning three sets of undies! 1HFY26 will be a good sighter on their ability to read the underpants market.

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