Step One Clothing Limited · ASX:STP
Step One Clothing — H1 2024 Earnings Presentation
35 slides from Step One Clothing's earnings presentation, Feb 20, 2024
Slide 1: 1H24 Results Presentation
For personal use only 20 February 2024 Greg Taylor, CEO and Founder Nigel Underwood, CFO Step One Clothing Limited (ASX:STP) 1
Slide 2: Agenda
For personal use only 01 1H24 Results Highlights 02 1H24 Results Overview 03 1H24 Financial Summary 04 Market Context and Strategy 05 Outlook 06 Questions 2
Slide 3: 1H24 Results Highlights
1H24 Results Highlights Profitable growth For personal use only Revenue Gross Margin Interim Dividend Women's revenue 1 $45.1m 81.2% 4 cents per share 13% of Revenue Up 25.5% vs pcp Up 0.5% vs pcp 100% payout Up 44% vs pcp EBITDA Cash Average order value Customers1 $10.1m $43.9m (AOV)1 1,540,000 $94
Slide 4: 1H24 Results Overview
For personal use only 1H24 RESULTS OVERVIEW* 4
Slide 5: 1H24 Operational Highlights
1H24 Operational Highlights Partnership model to increase customer recruitment For personal use only PRODUCT MARKETING PROCESSES & EXECUTION • Growth of Women's range to • Channel expansion, • First Australian 13% (1H23: 11%) of Revenue including partnership with Clothing company with FSC® certifica
Slide 6: Our Markets
Our Markets A tailored strategy for each region For personal use only AUSTRALIA UK USA Focus areas: Focus areas: Focus areas: • SLSA partnership. Evaluating • John Lewis partnership • Appointment of local additional partnerships • Additional 3PL capacity in UK expertise to manage • Sail GP partnersh
Slide 7: Partnerships
Partnerships Investing in partnerships to expand brand reach For personal use only Global Sail GP Sydney Race Feb 2024 FSC® Amazon • Global audience, growing in • FSC credentials promoted to • Pursing the Amazon Climate popularity and viewership sustainability audience Pledge Friendly badge • Consis
Slide 8: Step One for Women
Step One for Women Growth of 44% on pcp to $5.5m (1H23: $3.8m) For personal use only • When the Women’s line was introduced in January 2022, we increased our addressable market • With the introduction of the SeamFree range, Step One provides a choice of underwear product suitable for every occasion
Slide 9: Step One for Men
Step One for Men Functional underwear For personal use only • Created to solve the problems of traditional underwear with functional features to: • Anti-chafe tech • Reduce ride-up – avoiding the need for constant readjustment • Moisture wicking organic fabric - keep comfortable and fresher for long
Slide 10: Strong Online Engagement
Strong Online Engagement Continued customer database growth and increased conversion rate For personal use only WEBSITE TRAFFIC AVERAGE CONVERSION RATE CUSTOMER DATABASE GROWTH 6 months, M, excl Amazon 6 months, % excl Amazon 6 months, #’000, excl Amazon 9.4 8.3 65% 7.7 9.3% 8.1% 7.1 7.0 182 7.6% 12
Slide 11: Value proposition remains strong
Value proposition remains strong AOQ has increased indicating customer value proposition remains with customers who For personal use only know the product AVERAGE QUANTITY PER AVERAGE REVENUE PER ITEM CUSTOMER MIX1 ORDER (AOQ) (PRICE) 6 months, #/order, excl Amazon 6 months, #/order, excl Amazon 6 m
Slide 12: Importance of DTC model
Importance of DTC model Driving brand awareness while continuing to engage with loyal following For personal use only Marketing costs are not locked in to allow a pivot when required MARKETING STRATEGY MARKETING CHANNELS NEW EXISTING CUSTOMER CUSTOMER TV AND PR (awareness) Awareness Life Engaging TO
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Slide 14: Financial Highlights
Financial Highlights Strong revenue and attractive gross profit margins in a difficult market For personal use only SALES REVENUE GROSS PROFIT PROFORMA EBITDA1 6 months, $M 6 months, $M/% 6 months, $M/% 83.2% 83.1% 45.1 81.6% 81.6% 82.1% 26.9% 80.7% 80.7% 80.7% 81.2% 4.1 22.5% 38.1 35.9 34.1 34.1 20
Slide 15: Strong Operational Metrics
Strong Operational Metrics Strong returning customer order rates demonstrates trust in our product For personal use only CUSTOMER ORDERS1 AVERAGE ORDER VALUE (AOV)2 CUSTOMER MIX3 6 months, #‘000, excl Amazon 6 months, $ per Order, excl Amazon 6 months, #/order, excl Amazon $94.47 $90.26 488 $84.45 $
Slide 16: Strong Operational Metrics
Strong Operational Metrics Marketing and advertising key to growing the business For personal use only ADVERTISING1,2 COST TO ACQUIRE CUSTOMERS1,2,3,4 6 months, $M/% of Revenue 6 months, $ per customer order, excluding Amazon 56.8% 40.0 60.0% 50.3% 35.0 50.0% 40.8% 39.2% 30.0 38.7% 36.3% 33.2% 34.1%
Slide 17: Income Statement
Income Statement For personal use only 1H24 1H23 Movement $'000 $'000 $'000 % COMMENTARY Australia 26,264 24,113 2,151 8.9% UK 14,652 10,619 4,033 38.0% USA 4,136 1,161 2,975 256.2% • Revenue increased 25.5% on pcp Revenue 45,052 35,893 9,159 25.5% from growth in each market Cost of sales (8,480) (6
Slide 18: Balance Sheet
Balance Sheet As at As at For personal use only Variance 31 December 2023 30 June 2023 $'000 $'000 $'000 % ASSETS Current Assets COMMENTARY Cash and cash equivalents 43,935 38,313 5,622 14.7% Trade and other receivables 1,043 619 424 68.5% Inventories 17,574 23,326 (5,752) -24.7% • Strong cash of $4
Slide 19: Cash Flow Statement
Cash Flow Statement For personal use only 1H24 1H23 Variance $'000 $'000 $'000 % COMMENTARY COMMENTARY Cash flows from operating activities Receipts from customers (inclusive of GST/VAT) 52,689 40,158 12,531 31.2% Payments to suppliers and employees (inclusive • Cash receipts increased in line of GS
Slide 20: For personal use only
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Slide 21: Strategy: Global growth opportunity
Strategy Global growth opportunity For personal use only PRODUCT MARKET SIZE1 CAPITAL LIGHT PARTNERSHIPS ADJACENCIES Every person needs Low capital invested Engage in partnerships Natural adjacencies to underwear • Ownership of Brand, • Grow brand presence on men’s underwear designs, and established
Slide 22: Business Model
Business Model Step One is built on an innovative product and customer engagement model For personal use only with a strong ESG focus PRODUCT • UltraGlyde® panels Functional Product • Elastic 3D pouch Features • Organically grown Eco-Cert Bamboo ESG FOCUS • FSC® certification of supply chain Transpa
Slide 23: Sustainable and Ethical Supply chain
Sustainable and Ethical Supply chain Our ESG credentials are baked into our entire product lifecycle, from inception to delivery For personal use only Step One is the first Australian clothing label to be certified by the FSC® FABRIC OTHER GARMENT STEP ONE RAW MATERIALS MANUFACTURING MANUFACTURING M
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For personal use only 24
Slide 25: Looking forward
Looking forward Step One will continue to seek profitable growth For personal use only Profitable growth Expanding the Expanding our range customer funnel Investing in Continuous Expanding sales technology and improvement in channels and customer retention customer experience marketplaces 25
Slide 26: Thank You! Q+A
Real people wearing Step One… Thank You! Q+A Browse our product range on For personal use only www.stepone.life while we are talking 4.7 14,330 reviews1 4.4 34,494 reviews1 1. Customer reviews taken from respective websites as at 16 February 2024. 26
Slide 27: For personal use only
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Slide 28: Product Features
Product Features Step One underwear is design focused – with UltraGlyde panels, comfort pouches, and For personal use only comfortable viscose made from Bamboo fabric – it has revolutionised the underwear market for all genders VISCOSE MADE FROM BAMBOO FABRIC • Wicks away sweat and has excellent bre
Slide 29: A Brief History of Step One
A Brief brief History history of Step One STEP ONE Founder-led business with highly scalable model & strong track record of growth For personal use only STEP ONE IS BORN PRODUCTION SCALE + HELLO UK! HELLO US! WOMEN’S FSC® Idea, Product Dev GROWS COMPOSTABLE UK market testing Following a LAUNCH 1st c
Slide 30: Flexible Production Cycle
Flexible Production Cycle A highly flexible production cycle which can be managed to meet demand For personal use only Delays in global export logistics are affecting shipping, Production facilities in China and Vietnam: offloading & transfer to • Maintain flexibility across production cycle warehou
Slide 31: Local Distribution
Local Distribution Local warehousing and fulfilment for prompt customer delivery For personal use only • Product is warehoused in each country with 3PLs in Australia East Coast, UK East Coast & USA West Coast • 3PLs manage all inventory & logistics in each country o Receive product from the port of
Slide 32: Proforma Income Statement
Proforma Income Statement For personal use only FY20 FY21 FY22 FY23 FY24 $’000 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1H24 Australia 9,304 11,943 23,359 17,309 25,601 20,995 24,113 18,893 26,264 UK 0 1,000 10,726 10,323 11,031 11,013 10,619 9,748 14,562 COMMENTARY USA 0 0 0 0 1,444 2,103 1,161 650
Slide 33: Proforma Adjustments
Proforma Adjustments For personal use only FY20 FY21 FY22 FY23 FY24 $’000 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 1H24 COMMENTARY Statutory NPAT / (NLAT) 1,948 1,650 4,564 (4,682) (3,816) 813 5,275 3,341 7,107 • No proforma adjustments Less Costs made in FY23 or 1H24 - share based payments 0 133 2,9
Slide 34: Retained Earnings and Dividends
Retained Earnings and Dividends For personal use only $'000 Pre-IPO Post-IPO Total Proforma COMMENTARY Proforma Retained Earnings 13,360 13,360 • The dividend will be Proforma adjustment for PSU which did not (13,770) paid predominantly from Share-based payments treatment post IPO retained earnings
Slide 35: Important Notice
Important Notice For personal use only The material in this presentation has been prepared by Step One Clothing Limited (ASX: STP) (“Step One” or the “Company") and is general background information about Step One’s activities current as at the date of this presentation. The information is given in