Surprising to see that the market values the 2 companies on a similar ratio of EV/FY 24 revenues (2.6 x for TPW vs 2.8 x for Step One), while they have very different EBITDA margins (2.6 % for TPW vs 20 % for Step One). The main difference between the 2 companies : TPW has still a large share of drop shipping* which explains its lower gross margin (33 % vs 80 %+ for STP).
As a reminder, the 2 groups have a lot of comparable elements (even if they are not in the same category of products) : - they sell only online, - similar top line in FY 24 (+ 26 % vs +29 % for STP), - similar level of repeat customers (around 60 %), - high marketing costs (15 % of revenues for TPW vs 29 % Australia only for STP).
Some other comparisons between the 2 companies : - average order value : 94.50 $ (+ 5 %) for STP vs 461 $** (- 5 % for TPW), - conversion rate : 5.1 % for STP vs 2.8 % for TPW.
* it will change in the medium term as the company targets to have a majority of revenues from exclusive products (vs 43 % now). The company also expects to reduce its fixed cost from 11 % of revenues now to less than 6 % in FY 28. Overall, TPW targets an EBITDA margin of 15 % in the long term (before marketing investment in the brand, representing 2 % of revenues now). ** revenue per active customer for TPW (proxy for average order value)
