How ‘sticking to fundamentals’ helped underwear retailer Step One sell 15 million pairs in seven years

Since its launch seven years ago, Australian underwear brand Step One has sold 14.7 million pairs of underwear.

In a bid to change the underwear game, Sydney-based entrepreneur Greg Taylor founded Step One from his bedroom with just $5,000, initially as a men’s brand, before introducing its women’s range in 2020 and then a kids’ range.

Step One became a publicly listed company raking in $70 million in revenue and $10 million in profit in under five years, trading on the Australian Stock Exchange (ASX).

Today, the brand has a key team of 14 based in Sydney and sells a pair of Step Ones every eight seconds in Australia, the UK and the US.

According to the ASX Market Summary, Step One’s share price is currently sitting at 478% and revenue is up 25.5% on pcp to $45.1 million during the first half of the 2024 Financial Year (FY24), with the double-and triple-digit growth in the United Kingdom and the United States the key drivers.

The brand has also seen traffic to its website increase by 18%, with new customer growth up 25% on PCP.

Step One founder and CEO Greg Taylor told SmartCompany that his very first order for Step One was for 5000 pairs.

“It was all the money I had in my bank,” he says.

“I literally bet everything I had on this business and my first order was 5,000 pairs.

“Funnily enough, normally you’d make half of the order medium and large and I’m a size XL. I remember that I actually made that first order, half of it in XL. 

“So if they didn’t sell, I could at least wear them and I’d have good underwear for the rest of my life. 

“But to go from 5,000 pairs as my first order in 2017 to having sold nearly 15 million pairs. I was shocked when I saw that number, that’s a huge amount of pairs.”

With its “UltraGlyde” panels which sit between the legs of the trunk and boxer brief designs to prevent uncomfortable friction, Step One is also the first Australian clothing company to achieve a fully end to end FSC certified supply chain, as well as Australia’s first signatory of the Global Fashion Forever Green Pact.

As one of only a handful of businesses to achieve this without any funding as a single shareholder, Taylor floated Step One on the ASX in November 2021 for just under $300 million, selling 30% of the business for under $85 million.

Despite rising to $300 million, Taylor told SmartCompany that Step One entered a very different market at the start of 2022 which led to the underwear brand crashing during that year.

However, Taylor has credited the brand’s repeat buyers, digital ads and the use of AI for the brand being back to $200 million, with Step One making close to $8 million during the first half of the 2023 Financial Year (FY23).

“Whilst it’s mentally very hard, very challenging and I took it very personally. When you lose people’s money, it’s a really horrible feeling,” Taylor explains. 

“(But) eventually markets will turn around and cream rises to the top and I think that if you go through any phase of business, sticking to your fundamentals and getting back to the roots of what grew you, will ultimately get you back to where you need to be at some point.”

Taylor said the fundamentals of the business still haven’t changed.

“Underwear is closer to a staple than a discretionary item. Most people wear it every day,” he says.

“I think if you’ve got a great product, a great brand and you’re solving a problem. You stick to your fundamentals.

“The metrics haven’t changed either. We’ve got a really high customer repeat rate of 61%. 

“Obviously it’s a great feeling to be back and be back over the IPO price. But we did it by sticking to our guns and what we know.

“It’s not just a pair of comfy underwear. These are the things that will actually change and change your life.”

With Step One currently in Australia, the US and the UK, Taylor confirmed the brand is looking at testing new markets this year.

“We’re looking for growth and profit,” he says. 

“We’ll look at trialing a couple of different markets and then we’re looking at some product adjacencies as well. So sort of small iterations to our product that might be specific for certain sports or specific for certain activities. 

“We just released our women’s seamfree range in August last year and we sold out in like two days. So certainly growing into our women’s product and looking into other markets is really the future for us.

“Where I see the business going to and ending off is I’d really love to leave a legacy whereby my kids or my grandkids grow up at school wearing Step Ones, I think that would be really cool.

“That’s a long way off, but that’s sort of how I envisage seeing the business work and end up.”