Underwear brand Step One has reported an $8.5 million net loss after tax for the first half of FY26, joining a near $12 million drop in revenue.
Step One founder and CEO Greg Taylor said sales in late 2025 were below our expectations, primarily due to slower-than-expected clearance of legacy inventory despite promotional activity.
This has impacted the brand’s earnings before interest, tax, depreciation and amortisation, as Step One makes a $10.9 million inventory obsolescence provision, bringing EBITDA to a loss of $10 million for the half.
Taylor said the provision against the aged stock is now fully provided for, and no material additional provisions are anticipated.
“This result has reinforced the urgency of our reset program, which is tracking to plan,” Taylor said. “We are moderating discount depth, focusing on value-led product innovation, and restoring brand quality perception.
“Our customer retention has remained solid at 65 per cent, positioning Step One well to capture new opportunities as we broaden our product range, invest further in brand awareness, and work to make our offer more accessible to new customers.”
Given this transition phase, Taylor confirmed the brand will not be providing full-year earnings guidance at this stage.
The $8.5 million loss is well-down from an $8.2 million profit recorded in the first half of FY25.
Within the sales, Step One noted that revenue from its women’s products represented 14.8 per cent of total direct revenue. Revenue from indirect channels represented 18.3 per cent of total revenue after growing 75.9 per cent compared to the same time last year.
Following the inventory obsolescence provision, Step One’s gross margin declined to 73.2 per cent, despite reduced sale period activity and the price of 'older product' being discounted at a higher rate to clear it.
Advertising spend also increased slightly to 31.2 per cent of revenue, with increased brand advertising.
Step One also noted cost pressure on global logistics and distribution being exacerbated by higher inventory levels and the introduction of additional 3PLs.
The brand finished the half with cash and financial assets of $24 million and no debt.