Despite the market rallying today, the underwear retailer Step One have come out of a trading halt and crashed 56% ending the day at 22 cents a share.
Investors have been selling down the Step One share price on Monday following the release of a trading update out of the retailer.
According to the release, the company’s expansion into the UK, US, and women’s markets not performing and will not be meeting their guidance.
Management advised that US revenue has occurred at a lower rate than expected, as it works to establish its brand in a large and diverse region. Due to consumer confidence issues, the UK market entry has not performed as well either. Despite a strong start, the entry into the women’s market has not maintained the level of sales that the company has expected either.
The company’s FY22 guidance is most poor for its earnings, which explains the weakness in the Step One share price today. This means that its second half EBITDA will be a loss of $0.4 million to an operating profit of $1 million, which is down materially from its first half EBITDA of $7.4 million.
Step One’s Founder and CEO, Greg Taylor remains positive and stated:
“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.
We’ve continued to make operational progress, focusing on a tailored marketing strategy in each region, driving engagement with influencers and athletes in the UK and USA. This will continue into FY23 as we build momentum around the brand internationally. We’re now selling some of our core products on Amazon in our key markets to drive our brand visibility and support customer acquisition.”
All of this represents a really poor performance of the Step One share price now trading over 85% lower than its November IPO listing price of $1.53.