Retail initial public offerings seem to be gathering momentum as preteen and teen retailer Five Below Inc. has become the latest to file for an IPO, seeking to raise up to $150 million.
The retailer was acquired by Advent International in October 2010 for $193 million.
Founded in 2002 by David Schlessinger, executive chairman, and Thomas Velios, president and chief executive officer, the chain operates 192 units across 16 states, with plans to open another 50 units in 2012 and 60 in 2013. The stores average 7,500 square feet. The company plans to have more than 2,000 locations, and expects that most of its near-term growth will occur within its existing eastern U.S. markets.
Product offerings in the apparel and accessories space are all priced at $5 and below.
According to the filing on Wednesday with the Securities and Exchange Commission, the company said it has “achieved positive comparable-store sales during each of the last 23 fiscal quarters. Our comparable-store sales increased by 12.1 percent in fiscal 2009, 15.6 percent in fiscal 2010 and 7.9 percent in fiscal 2011.”
For fiscal year 2011 ended Jan. 18, income more than doubled to $16.1 million from $7 million a year ago. Sales rose 50.7 percent to $297.1 million from $197.2 million.
The company noted that operating income between fiscal 2009 and 2011 grew to $26.2 million from $6.9 million, representing a compound annual growth rate of 95.3 percent.
Five Below said in the filing that each of its stores was “profitable on a four-wall basis in fiscal 2011 and our new stores have achieved average payback periods of less than one year.” The filing indicated that net sales per store in fiscal year 2011 were $1.7 million, up 7.5 percent from $1.5 million in fiscal year 2010.
As for market opportunity, the firm noted U.S. Census Bureau data of over 63 million individuals in the U.S. between ages 5 and 19, representing over 20 percent of the U.S. population as of April 1, 2010. Citing a research study by EPM Communications Inc., the retailer said the targeted demographic group was projected to spend over $250 million in the U.S. in 2011.
The company said it plans to list its common stock on the Nasdaq under a trading symbol still to be determined.