Like a fisherman getting ready to reel in a great big blue fish, Dick’s Sporting Goods carefully set itself up for an $88 million whale of an IPO Tuesday.
The Pittsburgh-based sporting goods retailer ended a two-month long drought of no venture-backed IPO pricings. It priced 3.3 million shares at an opening price of $12.25, $.25 over its original offering price. Last Thursday, the stock was trading almost 18% above its opening price at $14.43.
Not only is Dick’s Sporting Goods the first venture-backed IPO to price since July, it’s also the first consumer retailer to test the public waters since Atlanta-based non-venture-backed baby apparel maker Cater Holdings Inc. hit the market August 23.
Prior to Dick’s Sporting Goods IPO, only HealtheTech managed to make its debut on the public market in July, selling 4 million shares at $7.50 a pop. The Golden, Colo.-based health monitoring device maker had raised $70 million from a list of venture capitalists that includes Berringea, New England Partners, Palm Ventures and Proctor & Gamble Co. The company is now trading at $4.80.
From the beginning of July until now marks the lowest combined IPO tally since the second quarter of 1978.
Dick’s Sporting Goods chief executive Edward Stack – son of company founder Richard Stack – is the company’s largest shareholder, with 37.4% of the company’s outstanding stock in his name. Paul Allen’s Vulcan Ventures controls 12.3% of the company. Other company shareholders include Bessemer Venture Partners, Oak Investment Partners, Robertson Stephens & Co., and Sprout Group.
Founded in 1948 as a bait-and-tackle shop in upstate New York, now Dick’s Sporting Goods operates a chain of 132 stores in 24 states along the East Coast as well as an online retail operation. The company first tapped the private equity markets in 1992, when Bessemer, Oak and Sprout pumped $7 million into the company to finance its expansion. Vulcan joined Dick’s group of original investors in a $34.3 million Series C round of venture financing that also fueled the company’s retail expansion.
In 1999, when Oak and Online Retail Partners invested $20 million in the company, Dick’s Sporting Goods emerged as an online contender in the world of sports retailing with dsports.com. It went head to head with Redwood City, Calif.-based Fogdog Inc., a company also backed by Sprout Group, as well as Draper Fisher Jurvetson, Intel Capital, Novus Ventures, Venrock Associates, Whitney & Co., and Worldview Technology Partners. Fogdog priced its IPO is December 1999, raising $66 million in the public markets. Fogdog’s stock was delisted a year later and its assets were acquired by Global Sports, but its Web site remains up and running.
Dick’s Sporting Goods has not abandoned its Web strategy, but it will not make further investment into the endeavor. Instead, the company will use the new proceeds of its IPO to expand its retail presence along the East Coast.
The company has posted year-over-year growth in net income of 172%. For fiscal year 2001, the company reported net income of $23.5 million on sales of $1.07 billion. In 2000 the company reported a net income of $8.64 million on sales of $893 million.
Merrill Lynch & Co. was the deal’s sole book-running manager, while Goldman Sachs & Co. was the co-lead manager on the deal.
Contact Carolina Braunschweig