Ollie’s Bargain Outlet Sets Terms for $125 Million IPO

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Ollie’s Bargain Outlet Holdings Inc. filed a second amendment to its S-1 form with the U.S. Securities and Exchange Commission for its initial public offering (IPO). The expected price of shares given in the filing was a range of $13 to $15, which would value the offering up to $124.95 million (assuming a $14 price, on 8.925 million shares). The company will file under the Nasdaq Global Market under the symbol OLLI.

The underwriters for the offering are JPMorgan, Jefferies, Merrill Lynch, Credit Suisse, Piper Jaffray, KeyBanc Capital Markets and RBC.

The company calls itself a “highly differentiated and fast-growing, extreme value retailer of brand name merchandise at drastically reduced prices.” It offers customers a broad selection of products, including housewares, food, books and stationery, bed and bath, floor coverings, toys and hardware.

The chairman, president and chief executive, Mark Butler, co-founded Ollie’s in 1982, based on the idea that “everyone in America loves a bargain.” From the time Butler assumed his current position as president and CEO in 2003, Ollie’s has grown from operating 28 stores in three states to 187 stores in 16 states at the end of June 2015.

Ollie’s expects to open between 25 and 30 new stores in fiscal 2015 and it believes that there is an opportunity for more than 950 Ollie’s locations across the United States, based on internal estimates and third party research conducted by Jeff Green Partners.

The company detailed its growth and financial performance from fiscal 2010 to fiscal 2014:

  • Store base expanded to 176 stores from 95 , a compound annual growth rate (CAGR) of 16.3% and it entered eight new states.
  • New stores opened from fiscal 2010 to fiscal 2013 produced average cash-on-cash returns of 61% in their first 12 months of operations.
  • Comparable store sales grew at an average rate of 1.7% per year.
  • Net sales increased to $638.0 million from $335.7 million, a CAGR of 17.0%

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The company detailed in the filing how it would use the proceeds:

We intend to use the net proceeds from this offering to repay $113.4 million in aggregate principal amount of outstanding borrowings under our Senior Secured Credit Facilities, out of which $50.0 million will be used to repay borrowings under the Revolving Credit Facility and $63.4 million will be used to repay borrowings under our Term Loan Facility.

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