Company Overview: Step One Clothing Limited (ASX:STP) is an online direct-to-consumer brand specialising in sustainably sourced and ethically manufactured innerwear. The company offers a wide range of high-quality, organically grown, and certified underwear designed to suit various body types. With its innovative designs and customer base, STP has expanded into a multinational business, operating in Australia, the US, and the UK.

FY25 Performance Amid Retail Headwinds

The key highlights of the FY25 results (for the year ended 30 June 2025, released on 20 August 2025) were as follows:

• In FY25, the company reported AUD 86.9mn in revenue, marking a 2.8% increase over the prior year, despite operating in a subdued retail environment. Net profit grew by 2.0% YoY to AUD 12.7mn. The company ended the year with AUD 33.1mn in cash and financial assets, maintaining a debt-free balance sheet.
• EBITDA declined by 3.7% to AUD 17.4mn, largely due to elevated promotional activity and margin pressures.
• The company paid a fully franked final dividend of 2.4 cents per share on 12 September 2025. This represented 100% of earnings distributed. Interim dividend of 4.4 cents per ordinary share for the year ended 30 June 2025 was paid in March 2025.

Financial Guidance:

• For FY26, STP has guided an EBITDA range of AUD 10mn to AUD 12mn, reflecting short-term impacts from strategic initiatives aimed at long-term brand strength and market share growth.
• Key expectations for FY26:
• Revenue growth is expected to be modest, driven primarily by continued strength in the UK market, expansion in women’s apparel, and the rollout of new product lines.
• Advertising expenditure will rise to enhance brand visibility and accelerate customer acquisition efforts across key regions.
• Personnel costs are set to increase, reflecting recent hiring, although additional headcount growth plans to be carefully managed.
• Gross margins are anticipated to remain in line with 2HFY25, supported by refined pricing strategies and targeted clearance of slower-moving inventory.
• STP is mitigating short-term earnings pressures from consumer and competitive headwinds through pricing, discounting, inventory, and marketing initiatives, while safeguarding brand equity and positioning for sustainable long-term growth.

Growth Strategy & Global Expansion Plans

The company’s strategic roadmap is centred on expanding product reach, deepening market penetration and exploring new sales channels to drive sustainable global growth:

• The UK market was a key growth engine in FY25, recording 8.7% revenue growth, driven by refreshed, localised campaigns. New channel testing, including early traction via TikTok Shop in the UK, is expected to deliver alternative sales avenues.
• In FY26, new product launches and brand-building campaigns are expected to support growth, particularly in the UK, which is poised to be a primary expansion market in the near term.
• The company also retains a capital-light strategy in the U.S., reserving flexibility while maintaining presence in a high-potential market.

STP Daily Price Chart

Stock Update

The stock has witnessed a correction of ~4.39% in the last month, and over the last six months, it has declined by ~39.44%. The stock has a 52-week low and 52-week high of AUD 0.380 and AUD 1.920, respectively, and is currently trading close to the 52-week low level. The stock closed at AUD 0.545, down by 0.909%, as on 24 September 2025. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 24 September 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.