We can hardly contain the excitement: a look at the initial public offering of The Container Store
From the moment we shut off the alarms on our iPhones in the morning until we send our final goodnight text, social media is in the palms of our hands. With this thought in mind, everybody is excited for Twitter to become a public company this upcoming week. Because of this hysteria, you may have missed The Container Store (TCS) making its debut on the New York Stock Exchange Friday. In its first day of trading, demand for a piece of the newly-public company spiked and the stock price was at $36.20 per share.
The Container Store is a retailer that specializes in niche home organization supplies. Bullish investors drove up demand for the company, calling it a “category killer” and praising the uniqueness of the brand and mission. The goal of any IPO is to present the public with the opportunity to buy a stake in the company. In return, that business gets the capital necessary to fund both physical and capital growth. The Container Store has raised $225 million through the sale of its stock and cites expansion as a top priority. The CEO of The Container Store, Kip Tindell, believes the influx of cash may help fund the expansion from the 63 current stores to more than 300 stores. This IPO comes in light of 13 consecutive fiscal quarters of positive sales growth.
As with any newly-traded public company, there are risks factors to its success. The most pertinent risk is currently in the company’s income statement. The Container Store has been unable to turn a profit for the past three annual periods. Net profit is an important measure of how profitable a business is. It is calculated by revenues and adjusting for the cost of doing business, depreciation, interest, taxes and other expenses. While the company has been in the red for the previous three fiscal years, The Container Store has seen positive growth with losses of $45 million, $ 30 million and $130,000 in 2011, 2012 and 2013 respectively. With positive growth numbers and a pending expansion, the store is trying to be one of the latest companies to take advantage of the bull market that saw the Dow Jones at a record high in the middle of last week. With rising profit margins, an uptrending stock market, and a niche market segment, Friday’s success is the first of many for this newly-public company.
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