Step One ASX float will be $230m payday for underwear founder Greg Taylor

Success selling chafe-free undies for blokes will see Sydney start-up Step One float on the ASX with a market value of $300m and former sports boss David Gallop as chairman.

David Gallop (left) will be chairman of male underwear business Step One, founded by Greg Taylor and floating on the ASX . Picture: Jane Dempster/The Australian.

Meet the $230m, 40-year-old environmentally-friendly male underwear entrepreneur, who had the idea for his fast-growing business while hiking in New Zealand only four years ago.

Greg Taylor is the founder of Step One, a Sydney e-commerce underwear firm set to list on the ASX on Monday with market capitalisation approaching $300m.

While that valuation has the company in the small cap space, it has attracted some heavy hitters and will also catapult Taylor into the ranks of the wealthiest young Australian entrepreneurs.

A former junior Australian representative rower, Taylor will emerge with about 123 million shares, or about 66 per cent of the company, when it lists at an indicative price of $1.53 per share.

That stake will be worth about $188m and Taylor will also receive $41.3m of the proceeds from the float, which has attracted strong support from institutional investors.

Step One Clothing and underwear founder Greg Taylor and chairman David Gallop. Picture: Jane Dempster

Taylor has enticed experienced sports executive David Gallop onto Step One’s board as chairman. A former National Rugby League and Football Federation Australia boss, Gallop says he was made aware of Step One by Harvey Norman boss Katie Page.

“Greg and I met during a (Covid) restricted period and we went for a walk for a coffee, and it appealed to me as a great product and … it being a great Australian success story, I’m really pleased to be involved.”

Step One sells male underwear online only, and sales have boomed during pandemic lockdown after Taylor set out to create a pair of ethically focused underwear that solved the problem “chafing” and “ride-up” caused by traditional underwear.

Taylor is keen to stress his business is not just a “Covid baby” though, given almost half its 600,000 customers are repeat buyers and 40 per cent are females buying for partners or relatives.

“It is a product that you need, you wear every day. You probably only buy one couch or one TV, but underwear is a perishable item to a degree.

“So I think the metrics around our repeat customer rates show we are doing something right in terms of the product, the pricing and messaging to the consumer.”

Step One, founded in 2017 and fully owned by Taylor before the float that is raising $81.3m from investors, is forecasting revenue to rise about 20 per cent to $73.9m in the 2022 financial year from $61.7m last year, while net profit is expected to climb to $10.5m from $7.7m in 2021.

About two-thirds of revenue is from Australia, and virtually all the remainder from the UK. But the big opportunity for Step One is the US, where it will spend $12.1m on “advertising and branding expenditure for … market entry.”

The business relies on its irreverent advertising on social media and television, which are often shown during sports events. Taylor says he has a studio at Step One’s Sydney office where he can record new ads for quick distribution.

A serial entrepreneur who had previously had marketing jobs and run businesses such as selling advertising on coffee cups, Taylor was on a mountain across in New Zealand suffering what he says is a common issue for many males that would give him the idea to establish what would become Step One.

“I had big legs from rowing days and just suffering from chafing and looked online there was no product that suited what I wanted. So I thought here’s an opportunity and got on a plane and went to factories in China, and started developing it from there.”

Taylor is also keen to stress Step One’s green credentials, with his underwear made with bamboo fibre grown without pesticides and made in hand-picked Chinese factories. Bamboo uses far less water than cotton and the company also has started using compostable packaging.

He says Step One has stockpiled merchandise in warehouses in Australia, the UK and the US should it encounter supply chain issues.

As well as expansion into the US, Taylor says Step One is also developing underwear to wear when playing sport and a women’s range.

“We are well underway in terms of the prototyping and we’re hitting the market shortly. And then the sports range so we actually worked with a couple of sports people to develop a sports range that we’ll release early next year, potentially.”

Originally published as Step One ASX float will be $230m payday for underwear founder Greg Taylor