Nov 1 Shares of Container Store Group Inc
doubled in their U.S. market debut on Friday as
investors encouraged by a recent run of impressive "first-day
pops" piled into the stock.
The company is the seventh this year whose shares have
doubled on the first day of trading, according to Jay Ritter, a
finance professor at the University of Florida.
Shares of Qunar Cayman Islands Ltd, a Chinese
travel website controlled by internet giant Baidu Inc,
also more than doubled in their U.S. debut on Friday.
"It is reflective of the hot IPO market at this point of
time," said John Fitzgibbon, founder of Iposcoop.com, which
Container Store's shares, which had been priced at $18,
opened at $35 and touched a high of $36.55, valuing the company
at about $1.7 billion. They were trading at $36.32 at 11.43 a.m.
ET on the New York Stock Exchange.
The Coppell, Texas-based company raised $225 million after
pricing 12.5 million shares at the top end of the expected
Container Store, established in Dallas in 1978, operates 62
stores in 22 states and the District of Columbia. Rivals include
Wal-Mart Stores Inc, Bed Bath & Beyond Inc and
privately owned Crate & Barrel.
Container Store has two reporting units -- TCS, which
includes retail stores, a website and a call center, and Elfa, a
Swedish manufacturer of component-based shelving and drawer
systems that it acquired in 1999.
"The housing market is a part of the reason that this stock
is doing well," Ritter said.
"The company isn't exposed to the downward trends in the
housing market. When people don't buy bigger or better houses
they feel the need to make better use of their existing space,
which benefits a company like this."
Retail stocks have outperformed the broader market so far
this year. The S&P Specialty Retail Index has risen 36 percent,
compared with a 24 percent rise in the S&P 500 Index.
But Container Store has yet to post a profit, even though it
achieved positive comparable-store sales growth in the 13
quarters through the end of August.
Container Store's net loss narrowed to $130,000 in the year
ending Aug. 25 from $30.7 million a year earlier. Net sales rose
11.5 percent to $706.7 million.
Lead underwriters for the offering were J.P. Morgan,
Barclays, Credit Suisse, Morgan Stanley, Merrill Lynch Pierce
Fenner & Smith, Wells Fargo and Jefferies.