IPO Watch: Teavana, Nirvana Meets Tea (TEA)

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If you are one who likes to see new retail brands come public in initial public offerings, a new IPO filing will be one you want to watch.  A company called Teavana Holdings, Inc. has filed its paperwork the SEC that will allow it to come public. 

No financial terms are available but the company did file to sell up to $100 million in common stock in its IPO.  The company plans to apply to list its shares on the New York Stock Exchange under the symbol “TEA.”  The filing lists BofA Merrill Lynch and Goldman Sachs as the joint book-runners.

Teavana was founded in 1997 and is a specialty retailer of premium loose-leaf tea, teaware, and more merchandise related to tea.  Its stores are generally small format shops with a hip look and very clean setting.  The company offers over 100 varieties of tea and has 146 company-owned stores in 34 states and 15 franchised stores primarily in Mexico.  The company also sells via its website at teavana.com.

The company’s filing noted, “We believe our customers associate the Teavana brand with premium tea products, a distinctive store ambiance and an “East Meets West” healthy living lifestyle.”  As a consumer of their products from time to time and as one who buys gifts there from time to time, they are telling the truth.

Teavana claims an average transaction size of about $36.00, so it isn’t fair to just call it a tea shop.  It also is not fair to call it “The Starbucks of Tea.”  The company tends to locate its retail venue stores in malls, lifestyle centers, and other high sales volume retail venues.
 
The company has increased sales from $33.8 million in fiscal 2006 to $124.7 million in fiscal 2010.  During that time it has also tripled its store count to 146 stores from 47 stores.  In fiscal 2010, its sales rose by more than 38% from 2009 and it claims a same-store sales gain of 8.7%.  In 2010, its net income rose by 126% to $12.0 million.

The company is closely held.  Founder Andrew T. Mack holds 69.5% of the company’s common stock and F. Barron Fletcher III’s SKM Partners, LLC holds 23.9% of the company. As of January 31, 2011, he company lists its cash as $7.9 million and total assets of $64.126 million.

Teavana is an IPO that specialty retail investors will want to watch.  Its full S-1 filing is here.

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JON C. OGG