No discount on IPO for Ollie’s Bargain Outlet
Ollie’s Bargain Outlet raised $143 million in a wildly successful initial public stock offering that positions the company for steady expansion of its 181 unit store base beyond core markets.
Ollie’s co-founder and CEO Mark Butler told Retailing Today that although the company has identified 950 suitable store locations, proceeds from the IPO will be used to repay debt and the company will maintain a measured pace of expansion.
“We’re not going to do anything differently than we’ve done for the last 11 year,” Butler said regarding the company’s approach to expanding into contiguous states.
The company currently operates in 16 eastern and mid-Atlantic states where last year in generated annual sales of $638 million and net income of $26.9 million. Sales growth this year will be driven by the addition of 25 new stores which is an increase from the 22 units opened in 2014 and the 23 units opened in 2013. Long-term, the company has identified suitable locations to expand its store base to 950 locations with the company’s existing distribution centers in York, Pa. and Commerce, Ga., capable of service up to 400 of the locations. The Georgia facility opened last April.
Ollie’s describes itself as, “a highly differentiated and fast-growing, extreme value retailer of brand name merchandise at drastically reduced prices,” and refers to its stores as, “semi-lovely warehouses.”
“You never know what we are going to have at Ollie’s,” Butler said regarding the company’s approach to featuring non-replenishable closeout merchandise.
The product assortment found in the typical 34,000-sq.-ft. Ollie’s store includes brand name items in 21 departments sourced by a 12 member merchant team with an emphasis on categories such as housewares, food, books and stationery, bed and bath, floor coverings, toys and hardware.
Ollie’s unique brand of retail, financial performance and growth potential resonated with investors. The company’s shares began trading the morning of July 16 at $22.68, 42% higher than the $16 price the company had set the prior day which was higher than an original forecast range of $13 to $15.
Butler co-founded the company 33 years ago and in 2003 he became president and CEO. In 2010 growth began to accelerate more meaningfully and in September 2012, CCMP Capital Advisors, Butler and members of the management team acquired the company.
Between fiscal year 2010 and fiscal year 2014, Ollie’s grew its store base from 96 stores to 176 stores and sales from $335.7 million to $638.0 million. Along the way, the company also paid its private owners a $58 million special dividend in 2014 and a $48.8 million special dividend this year.