Restoration Hardware Jumps in Market Debut
Restoration Hardware (NYSE: RH), a California-based retailer of luxury furniture, saw its stock price surge on Friday after completing a roughly $124 million IPO. The company sold 5.16 million shares priced at $24, the high end of its projected price range. The company reaped proceeds from around 4.8 million with selling stockholders accounting for the rest of the deal size.
Restoration Hardware sells products across categories such as furniture, lighting, textiles, bathware, decor, outdoor, garden and baby and child products. The company operates 73 retail stores, consisting of 71 galleries and two full-line Design Galleries, and 12 outlet stores throughout the United States and Canada.
In late afternoon on Friday, the stock was trading up at $31.80, a 32.50 percent jump from its IPO price. Investors see the IPO as a leveraged way to play a recovery in the housing market. With housing starts recently hitting the highest levels in 4 years, the deal was a popular one.
Josef Shuster of Ipox Shuster LLC told Bloomberg, “That's where the offering comes in, to capture the imagination of continued positive momentum in the U.S. housing market." He added, "There's definitely money out there for this kind of deal.” The offering represents a 14 percent stake in the company.
Restoration Hardware has displayed impressive operational momentum in recent quarters. Net income in the 12 months through July rose to $33.1 million from $4.9 million in the year earlier period. Sales were up 22 percent to $1.05 billion during the same period. The company has been able to improve its profitability by shrinking its store count and focusing more on direct sales through its catalog and online operations.
The company was previously publicly traded on the NASDAQ Stock Market, but was bought out by a group of investors in 2008. Bank of America (NYSE: BAC) and Goldman Sachs (NYSE: GS) were the leading investment banks in executing the IPO.
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