NEW YORK — Investors have given some new IPOs the cold shoulder, but the most recent public offerings of relatively small retail companies appear to break the pattern.
The positive reception generated by teen extreme sports retailer Zumiez and discount apparel retailer Citi Trends Inc. suggests an opportune time to jump into the IPO market for DSW Inc., the jewel of Retail Ventures, which is set to test the waters this week.
DSW plans to sell 14.1 million shares at $15 to $17 a share, according to filings with the Securities and Exchange Commission. It would use the proceeds to repay $190 million owed to parent Retail Ventures, and for other general corporate purposes.
Schottenstein Stores Corp. controls 59.4 percent of Retail Ventures, which also operates Value City Department Stores and Filene's Basement stores. The Schottenstein family also owns 17 percent of American Eagle Outfitters as well as other retail and real estate-related interests.
After the IPO, the Schottensteins would still control DSW through Retail Ventures, which would hold 94 percent of the voting power of the footwear retailer. In addition, Stephen Feinberg of Cerberus Capital Management owns about 20 percent of Retail Ventures, and Dimension Fund Advisors Inc. owns a 6.7 percent stake.
There has been strong interest in the DSW public offering, said an institutional investor who plans to buy shares of the footwear retailer once it goes to market.
"Citi Trends and Zumiez have done very well," said James Rice, analyst at Susquehanna Financial Group. "This is a good time to do a retail IPO ... DSW should do well, too, because it has a good story to tell. The numbers are looking good, and there is an expectation of comps growth and profitability."
Next up is the active sports and teen apparel brand Volcom Inc. The company said in an SEC regulatory filing last week that shares of Volcom are expected to be priced at $15 to $17 a share. The Costa Mesa, Calif.-based firm said it would issue about 4.2 million shares and hopes to raise as much as $91.4 million.
And, of course, there is the anticipated IPO of J. Crew in 2006. Still, the firms that have the advantage are the early movers, those which have recently gone to market or plan to soon.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"