The Step One Clothing Ltd (ASX: STP) share price has soared 23% after the market saw its FY24 trading update.
Step One Clothing creates high-quality, ethically-manufactured ‘innerwear’ from organically grown and certified and sustainable materials.
FY24 trading update
The online clothing retailer revealed how much revenue and operating profit it expects to report in FY24.
FY24 revenue is expected to be $84 million, up from $65 million, representing 29% growth compared to the 2023 financial year.
The FY24 earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be $17 million, compared to $12 million in FY23. This would represent year on year growth of 42%.
Management comments
The Step One founder and CEO Greg Taylor said:
I am pleased to report another period of profitable growth for Step One. Our high-quality sustainable innerwear products, in-house marketing capabilities and brand ownership continue to resonate well with customers.
With a strong financial position, we are well positioned to continue expanding our customer base, establish new retail partnerships and grow our brand presence globally. I remain very confident that Step One is in a strong position to continue its profitable growth.
Is the Step One share price a buy?
The market certainly seems to think so, with the valuation now much higher than yesterday.
However, it could still be one to watch because of the global growth in the US and the UK. Those are much bigger markets than Australia, and the overall growth seems to be going at a good rate.
Growth seems to have accelerated in the second half. In the first half of FY24, it reported revenue growth of 25.5% and EBITDA growth of 35.6%. For FY24 in total, revenue growth is 29% and EBITDA growth is 42%.
If Step One can keep growing revenue at a good speed, then rising profits, an increasing Step One share price and a growing dividend won’t be far behind.
I’d call it one of the most promising ASX small-cap shares and I would still be willing to buy a few shares.
