This article first appeared on GuruFocus .
Release Date: August 18, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Adjusted gross margin remained strong at 75.9%, only 0.5% below FY25, despite reduced discounting.
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Indirect channel revenue grew 62.3% and now represents 18.2% of total revenue, with profitable and disciplined expansion.
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New customer acquisition improved in H2, with new customers making up 47% of orders, up from 36% in H1.
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The company is debt-free with $25.8 million in cash and financial assets, providing a solid financial foundation.
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The U.K. market showed resilience, with revenue down only 11.1% compared to a 36.1% decline in Australia, and now represents 41% of group revenue.
Negative Points
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Revenue declined 26.7% to $63.7 million, with a significant drop in Australia and below-expectations performance in the women's range.
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Reported EBITDA loss was $7.4 million, with adjusted EBITDA profit of only $1.7 million, down from $17.4 million in FY25.
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Inventory obsolescence provision of $9.1 million weighed on results, and inventory on hand increased during the year.
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Conversion rate moderated to 4.1% from 4.6% in FY25, and advertising spend rose to 33.1% of revenue, up 6.1 percentage points.
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Operating cash flow was an outflow of $2.7 million, and dividends were suspended until retained earnings return to positive.
Q & A Highlights
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Q: How should we think about top-line growth moving forward, and how are customers responding to the pricing reset? A: Greg Taylor (CEO & Founder) stated that the company is focused on executing its reset plan and rebuilding the full-price customer base. While acknowledging cost-of-living pressures on consumers, he emphasized that the company's focus remains on executing its strategy and growing where it can see sustainable growth, without providing specific financial guidance.
Q: Can you provide more color on why the women's revenue declined below expectations? A: Greg Taylor (CEO & Founder) explained that the decline was in line with the reduced discounting strategy. He noted that the company identified that its approach to the women's customer differs from its men's customer. The product will remain on the site, but the company will develop new strategies to bring back revenue and provide a stable, profitable path forward for the women's category.
Q: What made the U.K. market more resilient than Australia, and what is the strategy there? A: A company representative stated that the U.K. is a less mature and larger market than Australia. The company has focused on local advertising, a local tone of voice, and extending its business through partners like Amazon and John Lewis. While John Lewis doesn't provide meaningful revenue yet, it offers brand credibility. The U.K. remains a key focus of the reset plan.
Q: Advertising spend grew as a percentage of revenue, but conversion dropped. Is there a weaker underlying customer or a traffic issue? A: A company representative clarified that while total spend fell by $2.3 million, the mix shifted towards brand-building activities like TV and sponsorships, and away from discount-led performance spend. This strategy is aimed at building the brand for the long term rather than "renting" the next transaction, which is a core part of the new approach.
Q: Is slower-moving stock still accumulating, and does this signal a risk of more obsolescence into FY '27? A: A company representative confirmed that the company has modified its approach to inventory provisioning and has improved its processes to push inventory more effectively. They do not expect a repeat of the specific inventory obsolescence provision seen in FY '26.
Q: Can you confirm the U.S. loss and provide a number excluding the inventory write-off? A: A company representative confirmed the U.S. loss was $3.9 million, but stated it was predominantly due to the inventory write-off. They indicated that excluding the write-off, the loss would be close to the prior year's figure of $0.5 million.
Q: Is the headcount reduction, which was mostly female, an indication of restructuring the women's brand team? A: A company representative denied this, stating the headcount reduction had nothing to do with the women's market. It was simply that the roles being changed happened to be held by female employees.
Q: Are you happy with new products being 4.3% of revenue, and what do you expect for product adjacencies over time? A: A company representative stated the company is not guiding on product mix. However, they expressed a desire for all new products to become a much larger portion of revenue, while declining to indicate a specific target mix.
Q: Are you going from one extreme to the other by not having an end-of-financial-year sale, and how will you clear slow-moving stock? A: A company representative emphasized that the reset is deliberate and about rebuilding customer lifetime value (LTV). The decision to skip the sale was to signal to customers that the brand no longer offers deep discounts. While not ruling out sales entirely, they may offer much smaller discounts on slow-moving lines during events like Black Friday, but will not revert to previous discounting levels.
Q: How do you look at customer acquisition cost and the value of your email database? A: A company representative explained that while acquisition cost is monitored closely, the primary focus is on customer LTV. This includes analyzing the average order value (AOV) of the first purchase, the time to a second purchase, and the mix of new products in subsequent orders. The goal is to increase AOV and cross-sell adjacencies to existing customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
