Step One Clothing, the direct-to-consumer underwear brand, has warned shareholders to expect a slump in sales of between 31 and 37 per cent over the half of the 2026 financial year.

After assessing year-to-date trading data and adding estimates for December, it predicts first-half revenue to land between $30 million and $33 million.

That will likely result in a pre-tax loss of between $9 million and $11 million.

In an update on the ASX, Step One said the sales results “were materially below expectations” and “our efforts to clear older and slower-moving inventory were not successful.”

Step One raised a $10 million obsolescence fund against the legacy stock, but anticipates no further need for material provisions.

Full financial results for the first half-year period of 2026 will be released on February 18.