Step One FY 2026 slides: revenue falls 27% amid strategic reset

Step One Clothing (ASX:STP) disclosed in its FY 2026 results on August 18, 2026, that revenue had fallen 26.7% to AUD 63.7 million, following a strategic reset aimed at rebuilding brand value. The stock plummeted 18.92% to $0.15 after the announcement, citing investor apprehension over the revenue decline and a AUD 9.1 million provision for obsolete inventory.

Despite this, management highlighted that the company maintained an adjusted EBITDA of AUD 1.7 million, with a gross margin of 75.9%, slightly down from the previous year. The company's FY 2026 performance showed a decline in revenue from Australia, the company's home market, where it contracted 36.1% to AUD 35.0 million. The UK maintained a steadier revenue decline of 11.1% to AUD 26.2 million, accounting for 41% of the total group revenue.

US revenue dropped 7.2% to AUD 2.5 million, as the company adhered to a disciplined approach in this market. Gross margin was impacted by the AUD 9.125 million inventory obsolescence provision, which management did not anticipate repeating in FY 2027. Management attributed the margin resilience to a deliberate reduction in discounting to restore brand equity and pricing integrity.

The presentation illustrated that FY 2026 marked a significant departure from the company's previous growth trajectory, with revenue growing from AUD 65.2 million in FY 2023 to AUD 86.9 million in FY 2025, but falling in subsequent years.