The Container Store prices its IPO at $18 a share
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."
(Read more: The Container Store gets organized for IPO)
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.
But there are some points of caution for investors. While same-store sales have turned in a long growth streak, the growth has slowed. EBITDA margin has slightly declined, and IPODesktop.com President Francis Gaskins pointed out that 98 percent of the company's operating income is used to pay interest.
Perhaps most concerning is that the company isn't currently profitable, though its annual net loss narrowed from $45.1 million in 2011 to $30.6 million in 2012, and further shrank to a loss of $130,000 in its latest fiscal year.
Gaskins also warned "institutional investors will become fixated on the 300-store potential in the U.S., not realizing that is a paid by The Container Store number," he said. "Nevertheless, the rating on TCS is a 'buy' on the IPO, because of store growth potential and because it leads the category."
(Read more: The Container Store files for an IPO on the NYSE)
The company is known for its employee-first culture, a key tenet of its competitive strength. It has a highly selective hiring practice, searching for those most passionate about its products and solution-based selling mantra. The retailer hires less than 4 percent of annual applicants and spends 260 hours training its full-time employees in the first year.
Fortune magazine has ranked the company in its "100 Best Companies To Work For" for the past 14 years. While the company doesn't disclose an employee's average pay, it does tout "above industry average compensation" and comprehensive benefits.
According to Fortune, hourly salespeople earn an average of $46,925 a year at The Container Store, roughly double the industry average.
In its S-1 filing, The Container Store said its average full-time employee turnover rate is approximately 10 percent annually, which is dramatically lower than the retail industry's average. Last year, the sector's overall turnover rate was 41.6 percent, according to the National Retail Federation.
—By CNBC's Courtney Reagan