Sponsor-backed specialty home decor retailer At Home Group priced one of 2016’s rare consumer retail IPOs late Wednesday, scoring mid-range pricing on a deal that will pay down debt and fund an aggressive store growth plan.
At Home priced 8.7m new shares at the US$15 versus the US$14-$16 range, though some sources had earlier indicated upper end pricing was more likely. Bank of America Merrill Lynch, Goldman Sachs, Jefferies and Morgan Stanley led the offering.
The midpoint outcome reflected several cross-currents in investors’ evaluation of the company.
At Home has circa 25% growth, aggressive management and an operating model (big product range, reasonable prices, large format/big box stores) to underscore its appeal to growth investors. The retailer has 115 stores and sees long-term potential to expand to at least 600 stores in the US.
On the other hand, there is no lack of competition for the home decor consumer dollar, the company has a limited online presence, the most recent quarter saw a pronounced slowdown in comparable stores sales and consumer/retail IPOs have been scarce this year.
“There was definitely some price sensitivity from some of the investors we spoke with,” one ECM banker in the underwriting syndicate said. “Their strategy to grow by ‘opening the box’ is a little bit of throwback to the 1980s and 1990s.”
Underwriters pointed to Ollie’s Bargain Outlet and Five Below as high-flying comps, though Michaels and The Container Store are also public competitors in one way or another and mentioned as such in the S-1 (along with many others).
At Home is controlled by private equity firm AEA Investors and co-investor Starr Investments.
At Home will debut on the NYSE early Thursday under the ticker symbol “HOME”.