Guess which ASX All Ords share is surging 19% on a return to profit

A happy woman smiles as she looks at a tablet in a room with green plant life around her.A happy woman smiles as she looks at a tablet in a room with green plant life around her.

S&P/ASX All Ords (ASX: XAO) shares may be in the red today but Step One Clothing Ltd (ASX: STP) sure ain’t following suit.

The ASX retailer, which is a nano-cap share with a market capitalisation of $57.5 million, released its 1H FY23 results today, revealing a return to profit that has sent investors into a frenzy.

The ASX All Ords share opened at 35 cents, up 13% on yesterday’s close. It hit an intraday high of 38 cents in afternoon trading, representing an impressive 22.5% gain.

The Step One Clothing share price is currently 37 cents, up 19.4% as the market close nears.

Let’s see what news this ASX company revealed today.

ASX All Ords share skyrockets on 238% profit surge

The key news today is that group net profit after tax (NPAT) was $5.275 million in 1H FY23.

This is a vast improvement on 1H FY22 when the company recorded a $3.816 million loss.

Here are the highlights of 1H FY23 for the online innerwear business:

  • Revenue of $35.9 million, 5.7% down on the prior corresponding period (pcp) of 1H FY22
  • Statutory earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $7.5 million, up 395% pcp
  • Proforma EBITDA of $7.5 million, up 0.5% pcp
  • Gross margin remains at a strong level of 80.7%, down 2.4% pcp
  • Average order value up 16% pcp to $90.26
  • Strong financial position, with closing cash of $32.6 million and no debt.

What else happened in 1H FY23?

The company increased its customer base by 136,000 people in 1H FY23, which was lower than the growth achieved in 1H FY22 with 193,000 new customers. (Bear in mind, inflation wasn’t going crazy and discouraging discretionary spending over the 1H FY22 period).

The company now has more than 1.2 million global customers. Step One Clothing says global supply chains are now improving and this will allow it to reduce the amount of inventory it has been holding.

What did management say?

Step One Founder and CEO, Greg Taylor said:

This half we successfully pivoted from prioritising top-line growth to a focus on profitability in response to challenging trading conditions in our key markets. Simultaneously, we continued to build our position as a leading brand for sustainable and quality innerwear products.

Our products continue to resonate well with our customers, reflected in an increase in average order value, and over 136,000 new customers added in the first half. We continue to maintain a strategic focus on our core offering as we explore product adjacency opportunities.

What’s next?

Taylor said an international expansion would be on the horizon once the global economy settles down.

Taylor said:

I remain steadfast in my belief in the products and my commitment to continuing to build this business.

I am confident that as macro-economic conditions ease Step One will be well positioned to pursue its international ambitions.

A quick history on this ASX All Ords share

Step One Clothing began trading on the ASX in November 2021 after its initial public offering (IPO) when shares were offered to early investors for $1.53 a piece.

Since then, the ASX All Ords share has fallen 86%.

However, things are looking up in 2023 with a year-to-date share price gain of 42%.

This is a vast outperformance against the All Ords, with shares up a collective 5.3% over the same period.

The post Guess which ASX All Ords share is surging 19% on a return to profit appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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