The Chico, Calif.-based digital native has set its initial public offering range at $16 to $19 a share — valuing the women’s fashion brand at $595 million to $706.6 million.
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Lulu’s plans to sell 5.8 million shares to the public, which translates to proceeds of about $89 million at the offering’s midpoint of $17.50. The company plans to use that money to pay off a $71.4 million term loan and redeem $17.9 million in preferred stock.
The process, underwritten by Goldman Sachs & Co., BofA Securities and Jefferies, will put the company out into the open market trading on the Nasdaq under LVLU.
Lulu’s arrives on the scene with the IPO party already raging — a curious combination of ultra-hot stock market, an unexpectedly strong pandemic consumer and a love for all things digital that has drawn companies into the market.
Already Rent the Runway, Olaplex Holdings, Warby Parker, On Holding and many others have gone public. Allbirds is expected to join them soon.
Lulu’s offering will count as something of an introduction for many people in the industry since the company, founded in 1996, has largely operated below the radar.
The company took a big hit during the first year of the pandemic — revenues fell 32.7 percent to $248.7 million last year with losses of $19.8 million. But Lulu’s started to rebound in the first half of his year. Sales increased 23.6 percent to $172.5 million for the six months with net profits of $4.2 million.
“Unlike traditional retailers, we leverage a ‘test, learn and reorder’ strategy to bring hundreds of new products to market every week; we test them in small batches, learn about customer demand and then quickly reorder winning products in higher volume to optimize profitability,” the company said in its registration statement filed with the Securities and Exchange Commission. “This strategy allows us to rapidly convert new products into profitable sales on a consistent and repeatable basis while minimizing fashion and trend risk.”
Lulu’s averaged 236 new products each week during the first half. The brand had about 2.5 million active customers over the 12 months ended Oct. 3. Average unit retail prices come in $50, which the brand describes as “affordable luxury.” Lulu considers itself style agnostic, but is known particularly for its Gen Z- and Millennial-focused dresses and occasion wear.
Since April, Lulu’s has been led by chief executive officer David McCreight, who previously was CEO of Urban Outfitters Inc.’s Anthropologie Group and prior to that was president of Under Armour Inc.
After the officer, H.I.G. Growth Partners will continue to own 35.1 percent of the company. Institutional Venture Partners and the Canada Pension Plan Investment Board will each own 17.9 percent stakes.
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