Step One has recorded a 25.5% increase in revenue to $45.1 million in the first half of FY24, driven by double and triple-digit growth in the United Kingdom and the United States respectively.
In the United Kingdom, Step One recorded a 38% lift in revenue to $14.6 million. This comes as the underwear brand expanded its channels through a wholesale pilot launch in December 2023 with national retail business John Lewis.
During the period, Step One connected with a new third-party logistics in the UK. This additional 3PL will focus on the fulfilment of sales made through John Lewis and increase fulfillment capacity for other sales channels over the long term.
Although inventory duplication is necessary, Step One noted that in these initial phases, the value is not material and is restricted to ‘core’ inventory SKUs. The new 3PL held less than $0.1 million of inventory as at 31 December 2023.
Meanwhile, in the US, Step One recorded a 256.2% lift in revenue to $4.13 million. This is mostly driven through online sales, however, a small portion came through its wholesale deal with Amazon.
In Australia, revenue was up 8.9% to $26.2 million.
Step One founder and CEO Greg Taylor said 6.1% of total company revenue came from Amazon sales, which covers both the US and UK market. The deal involves Amazon fulfilling the orders, with inventory held in its warehouses. As of December 31, 2023, Amazon held approximately $0.2m of inventory globally.
“While our expansion into [the US] market required an initial expenditure to acquire new customers, our data reveals that once someone experiences our Step One product, there's a 50% likelihood of their return,” Taylor said. “Given this, we remain confident in achieving profitability in the US market during the second half of the year.”
Alongside the overall lift in revenue came a 35.6% lift in earnings before interest, tax, depreciation and amortisation (EBITDA) to $10.1 million.
Taylor said much of this growth in EBITDA came from pushing its marketing department into onboarding artificial intelligence through its process. This has driven staffing in the marketing department to six people, and has cut down other costs.
“Our strong performance during the first half of 2024 underscores the success of our profitable growth strategy,” Taylor said. “During the period, our strategic marketing initiatives directly led to our customer database growing to over 1,540,000 customers globally, up 40% from the 1,101,000 at 31 December 2022.”
The company also reported growth in its women’s range, which now accounts for 13% of revenue, with sales of women’s lines increasing by 44.8%.
Step One claimed this growth was driven by the introduction of its ‘Seamfree’ range which sold out on several occasions.
Across Step One’s entire range, its average order value (AOV) increased by 4.7% to $94.47, with the average price reduced to $18.50 (1H23: $20.40) as more customers sought volume discounts, while stronger marketing communication helped increase the average order quantity (AOQ) to 5.1 items per order.
Customer traffic increased 18.2% to 8.2 million, while website visits and conversion rates increased to 5.1%.
“We are committed to driving growth, fostering strategic partnerships, and leveraging innovative solutions to enhance our capabilities. The first half of 2024 represents a pivotal period for Step One, and we look forward to continuing this trajectory of success."