Step One Clothing\u2019s share price is up 500pc in 12 months
\nThe company\u2019s unique underwear has gained a strong online following
\nStockhead reached out to founder and CEO, Greg Taylor<\/p>\n
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With living costs soaring and rates sky high, Australians are increasing their expenditure on essentials such as insurance and medical costs, leaving less room to spend on discretionary purchases.<\/p>\n
This collision between a cost of living crisis and a cost of doing business crisis has exposed many retailers, some of which are unprepared for the downturn.<\/p>\n
But there\u2019s one ASX-listed retailer which has seen its stock price surge by over 500% in the past 12 months \u2013 \u00a0Step One Clothing (ASX:STP)<\/a><\/strong> \u2013 a $300m market capped online underwear retailer based out of Sydney.<\/p>\n Step One\u2019s revenue increased by 25% in the last half to $45m, bucking the sluggish trend we\u2019ve seen elsewhere in the retail sector.<\/p>\n \u201cMost other retailers have struggled in the last year, but underwears are probably closer to a staple than discretionary, because you still got to wear it. It\u2019s also because our product is so good,\u201d says CEO and founder, Greg Taylor.<\/strong><\/p>\n The company\u2019s underwear is indeed one of the most unique products in the market, made out of viscose derived from organically grown bamboo. The briefs are specifically designed to offer maximum comfort and prevent sweat and chafing.<\/p>\n The company\u2019s sales literature says:<\/p>\n \u201cFor the men specifically, your Step One boxer briefs comes with a 3D Comfort Pouch which works to lift and separate your \u201ceggs\u201d from your legs and keep your goods in place. Not to mention, some gents find it creates a more flattering look for their crown jewels.\u201d<\/em><\/p>\n Taylor explained that when he started the company in 2017, the underwear business has not been reinvented for about half a century.<\/p>\n \u201cWhat we had back then was like three pieces of flat cotton stuck together, and nothing new had been invented for 50 years.<\/p>\n \u201cI suffered from chafing and was using creams and oils, and I thought there\u2019s surely got to be a product out there that\u2019s built to stop chafing,\u201d recalled Taylor.<\/p>\n Finding none, Taylor then decided to make one himself, literally building the business from the ground up. Since then, Step One has sold nearly 15 million pairs of briefs.<\/p>\n \u201cThere were already some players in the market, but they didn\u2019t understand that our underwear was different. It wasn\u2019t just a pair of underwear; our technology solved chafing, sweat and riding up.\u201d<\/p>\n \u201cSo we ran these ads on Facebook, and we asked people the question: \u2018Do you suffer from sweat chafe and leg ride up?\u2019<\/p>\n \u201cThey just worked incredibly well, turns out I wasn\u2019t the only person that suffers from sweat chafing. The business then just grew from there,\u201d said Taylor.<\/p>\n \u00a0<\/p>\n The company was listed on 1 November 2021 where the share price \u00a0gained over 70% on the first day of trading.<\/p>\n In 2022, Step One became Australia\u2019s first clothing and garment company to achieve a FSC (Forest Stewardship Council)<\/strong> certification<\/strong>.<\/p>\n This certification is awarded to companies with commitments such as zero forestation, fair wage & work environments, as well as plant, and animal species protection.<\/p>\n \u201cWe take being ethical and sustainable so seriously here, that we started this process of being FSC certified three years ago,\u201d explained Taylor.<\/p>\n \u201cThe FSC ensures there\u2019s no deforestation or natural habitat loss in our production process.<\/p>\n \u201cWe\u2019re naturally irrigated, and everything we do from knitting, dyeing the yarn, the packaging \u2013 they\u2019re all FSC certified. And people can buy our product knowing there\u2019s no child or forced labour.\u201d<\/p>\n In January this year, the company announced one of its biggest partnerships, a deal with Surf Life Saving Australia (SLSA).<\/strong><\/p>\n \u201cWe\u2019ve not done a partnership prior to that, not at that scale. But these partnerships are a really good way to partner with a prestigious brand and promote our product, where they\u2019ve got 330 clubs and 3 million members,\u201d Taylor said.<\/p>\n Distribution wise, Step One currently mainly sells its items online on two platforms, its own website and Amazon. They also became available on the website of the high-end UK department store, John Lewis, about 18 months ago.<\/p>\n \u201cIf you look through some of the reviews, we\u2019ve got over 60,000 five-star reviews. It\u2019s easy to get a one-star review, but a five star review especially for men\u2019s underwear is really hard,\u201d said Taylor.<\/p>\n \u201cAnd if you look on, say Trustpilot<\/a>, and you sort by the most recent, we get a five-star review every couple of hours. So we sell a pair every eight seconds. That\u2019s how big the businesses has got.\u201d<\/p>\n \u00a0<\/p>\n Around 87% of Step One\u2019s sales are currently made to men, while only a small slice, 13%, to women.<\/p>\n Taylor believes there\u2019s a long runway ahead for the company to make inroads into the women\u2019s market.<\/p>\n \u201cThe men\u2019s underwear market in Australia is $600 million, and women\u2019s is $1.2 billion. And we\u2019ve just entered the women\u2019s market, now we\u2019ve got a full suite of women\u2019s products.\u201d<\/p>\n \u201cWhat that\u2019s done is increase our total addressable market from $600 million to $1.8 billion.\u201d<\/p>\n \u201cWhat we also found interesting was that half of men\u2019s underwear was actually bought by women, so we\u2019ve still got such a long way to go in even in our men\u2019s product,\u201d said Taylor.<\/p>\n At the moment, the company is only selling in three markets \u2013 Australia, UK, and a small operation in the US.<\/p>\n \u201cWe\u2019ll probably look at some other markets, potentially in the Asian region. It could be India, but we\u2019re looking at a couple of different options.<\/p>\n \u201cThere\u2019s so much growth to come, and there is no reason why everyone in the world shouldn\u2019t be wearing this product. It\u2019s that good,\u201d said Taylor.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n\n \ufeff<\/span><\/span>\u00a0<\/p>\n \u00a0<\/p>\n City Chic Collective (ASX: CCX)<\/a><\/strong><\/p>\n City Chic is an omni-channel women fashion retailer that has recently completed a strategic review focusing on cutting its cost base.<\/p>\n The company said the business rationalisation will result in a $25m cost savings.<\/p>\n The retailer\u2019s collection focuses on a family of brands suited to curvy women.<\/p>\n The company\u2019s targets this year and beyond include increasing its marketing investment, targeting a 60% gross margin, and creating styles that increase average sell price and deliver that margin.<\/p>\n \u00a0<\/p>\n Mosaic Brands (ASX:MOZ)<\/a><\/strong><\/p>\n Mosaic operates over 1,100 retail stores across Australia under the brands Millers, Rockmans, Noni B, Rivers, Katies, Autograph, Crossroads, W. Lane and Beme.<\/p>\n The company\u2019s core market is women over the age of 50.<\/p>\n Since returning the group to post-Covid profit in FY23, the company said its priority is on improving its balance sheet in FY24, as the final step of its turnaround.<\/p>\n In terms of the second half outlook, recent negotiations have resulted in the group achieving some of the most favourable cost prices for its products experienced in its history, which is forecast to further support earnings and balance sheet improvement in H2.<\/p>\n \u00a0<\/p>\n Accent Group (ASX: AX1)<\/a><\/strong><\/p>\n From humble beginnings in 1988, starting as a wholesale distributor based in New Zealand, Accent Group has now become the top shoes retailer, with 750 retail stores across Australia and New Zealand.<\/p>\n The company has exclusive distribution rights to 13 shoe brands, including the iconic Skechers, Timberland, Dr. Martens, Vans, Merrells, Sperry, and Saucony sneakers.<\/p>\n In the last half, Accent\u2019s total sales were $810.9m, with a bottom line NPAT of $42.2m.<\/p>\n \u00a0<\/p>\n Globe International (ASX: GLB)<\/a><\/strong><\/p>\n Globe International is a global producer & distributor specialising in purpose built apparel, footwear and hardgoods in the board sports, street fashion, outdoor and workwear markets.<\/p>\n Its proprietary brands include Globe, Salty Crew, FXD, Impala Skate and It\u2019s Now Cool.<\/p>\n 2023 was a challenging year for the company. However, fundamental issues have been addressed, entering the 2024 financial year in a stronger and stable position.<\/p>\n The Australian market continues to be a standout division for the group. Meanwhile, North America, after a year of inventory adjustments, is on the path to improved performance and has a brand mix set for long term growth in that market.<\/p>\n <\/span><\/p>\n The post Underwear stock Step One Clothing has surged 500pc in a year, and here\u2019s why it\u2019s just getting started<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Sustainability, 5-star reviews and partnerships<\/h2>\n
There\u2019s more to come<\/h2>\n
Step One Clothing share price today:<\/h2>\n
Other fashion-related stocks on the ASX<\/h2>\n