ASX debut nets Step One founder $150m, but what’s next for the company?

There’s more than becoming a millionaire on the Step One founder’s to-do list…

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Monday was a very green day for shareholders of Step One Clothing Ltd (ASX: STP) as it made its debut on the Australian Stock Exchange. The largest shareholder, founder, and CEO Greg Taylor witnessed a cool $150 million in paper profits on its first day of listed life.

However, the entrepreneurial-minded Taylor has no plans of resting on his laurels after taking the bamboo fibre underwear company public. Instead, his plans describe bigger and bolder pursuits ahead.

What exactly could the future of Step One entail?

Only the beginning for ASX-listed Step One

To the astonishment of some, Step One was started by Taylor not too long ago, back in 2017. In the space of four years, the men’s underwear brand has gone from a simple solution to a $500 million company.

The concept was devised by Taylor after having his own qualms with traditional cotton underwear. Out of a desire for a better answer, the former elite rower landed on the bamboo alternative.

Clearly, the broader market has shared in Taylor’s own experiences. Since launching the direct-to-consumer online underwear the retailer has delivered over 1.25 million orders to more than 725,000 customers.

This incredible feat has been achieved through its operations in Australia and the United Kingdom. However, with fresh capital on the balance sheet, after Step One IPO’d on the ASX, Taylor now has his sights on more.

Out of the successful $81.3 million raised through the initial public offering (IPO), around $12 million is being allocated to a push into the United States. According to the company’s prospectus, the men’s underwear market across Australia, the UK, and the US was worth approximately $8.3 billion in 2020. Undoubtedly, Step One wants to have as much of that pie as possible.

Currently, Step One is estimated to have about 6% of the men’s underwear market in the land down under. Which indicates there’s plenty of room for domestic growth. However, Taylor’s brand is now looking to branch out a little further with entry into women’s underwear as well.

History of growth

While Step One’s ASX track record is short, its prospectus bares all the juicy historical performance details.

In FY19, the company achieved $7.7 million in revenue, fairly modest. But this figure quickly grew to $61.7 million in FY21. Unlike some high-growth companies, Step One is also already profitable. The last financial year banked $7.7 million in net profit after tax.

Finally, with high growth ambitions on the cards, the company is forecasting $10.5 million in profits for FY22.

Should you invest $1,000 in Step One Clothing right now?

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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