Underwear retailer and recent ASX-listing Step One Clothing [ASX:STP] fell 55% on downgraded revenue and EBITDA guidance.
STP shares plunged 55% on Monday after the recently listed retailer admitted slower than expected revenue growth in key markets.
The steep fall means the stock is now down 85% over the last 12 months.
In the last month alone, STP is down 75% as the wider risk-off mood punished the stock further.
Step One’s freefall on Monday came despite a rather buoyant day of trade on the ASX, with the benchmark ASX 200 Index up a modest 0.25% in afternoon trade.
Source: Tradingview.com
Step One’s lacklustre FY22 trading update
Step One — pitching itself as an online, direct to consumer, innerwear brand — came out of a trading halt today to relay some sobering news.
STP now expects sales revenue growth to be 15–20%, compared to previous guidance of 21–25%.
Expected proforma EBITDA was revised down to $7.0–8.5 million from $15 million.
Step One attributed the revisions to ‘tougher than anticipated trading conditions’ and ‘impacted consumer confidence’, with the US market bringing a return loss of more than US$3 million.
Adding to its woes, the retailer’s marketing costs rose, resulting in a 46% allocation of revenue to advertising campaigns.
Step One now expects its gross profit margin for FY22 to be closer to FY21 levels, ‘despite recent increases in selling prices’.
Source: STP
STP share price outlook
CEO Greg Taylor said:
‘I am disappointed to inform you of the impact of the headwinds we are currently facing in our international expansion.
‘These challenges are by no means insurmountable, and I am completely focused on solving the issues we are facing to deliver an exceptional product to customers around the world.
‘We had a track record of delivering in international markets, but we are now a much more substantial business and our focus is on building a strong platform, with the right infrastructure to support sustainable international growth.
‘This will ensure that Step One is well-positioned to rebound strongly as global macro-economic disruption eases.’
Step said it remains determined to reach its growth prospects, focusing on a ‘responsive and adaptive strategy’.
Time will tell if STP’s new strategies work.
Now, it’s not just Step One suffering from a souring market outlook.
Inflation, rising costs, and stubborn supply chain snarls continue to hit companies across the board.
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Regards,
Kiryll Prakapenka,
For Money Morning
