The Container Store's IPO priced at the high end of its expected range at $18 per share. Shares of the retailer, which sells organization products, will begin trading on the New York Stock Exchange on Friday.
The expected range for the 12.5-million-share initial public offering was raised to $17 to $18 per share on Thursday, from the expected $14 to $16 per share range set last week.
The Container Store will trade under ticker symbol TCS on the NYSE. Proceeds from the IPO will be used to pay dividends to holders of preferred stock and repay debt.
Expectations are high for the retailer, because while it competes at some level for market share against big box retailers and online offerings, there isn't another retailer with the same specialized product offering.
"One of the beauties of The Container Store is that they really are a category killer in terms of storage products and storage solutions," said Anthony Chukumba, BB&T Capital Markets managing director and senior equity research analyst. "There's no other national retailer who is doing what these guys are doing."
According to its S-1 filing, The Container Store has posted 13 consecutive quarters of same-store sales growth, an enviable retail metric. While this only counts stores open at least a year, Chukumba said the company has very strong new store economics as well.
"The new store four-wall profit margin is about 22 percent, and new stores pay back in about 2½ years, so that's very attractive," he said.
The retailer's fleet includes just 62 stores in 22 states and Washington, D.C., according to its S-1 filing, but it cited eSite research that it has the potential for 300 brick-and-mortar locations. Each location averages 19,000 square feet selling 10,500 stock-keeping units, nearly half of which are exclusive to The Container Store, including its elfa storage solutions.
While the company doesn't have current plans for a 300-door expansion, by year-end it will have added six new stores to its fleet, with plans to add six more in 2014.
The retailer's average ticket has also improved, to $57.54 in August from $54.70 a year prior. Customers are known for their store loyalty and willingness to spend, something key for a retailer with relatively higher-priced merchandise.