Megastore leader Staples file bid to go public - office products warehouse store

Discount Store News, April 24, 1989

Megastore Leader Staples Files Bid to Go Public

NEWTON, Mass. -- Staples, which pioneered the office products warehouse concept, disclosed plans to go public through an initial stock offering of 2,850,000 shares.

The company filed a registration statement with the Securities and Exchange Commission last month to sell shares to the public at $15 to $18 per share. At the maximum offering price, Staples would raise $51.3 million, less underwriting fees.

Proceeds of the offering would go for store expansion, Staples said. It operates 24 stores, the newest of which opened two weeks ago in Alexandria, Va.

It expects to open 14 more during its fiscal year that ends April 28, 1990, a source close to the company said. Staples already has signed leases for nine of those 14.

Expansion plans for 1989 include entering a new market, Ohio, with an opening next month in Kenwood, Followed by two stores in Columbus in August.

Other anticipated stores are: Rockville, Md., also scheduled to open next month; Fairfax, Va., June; Secaucus, N.J., July; Freeport, N.Y., August; Parsippany, N.J., September; and Paramus, N.J., January, the registration statement shows.

Staples opened its first office product discount store in May 1986 in Brighton, Mass., a Boston suburb.

Previously, Staples fueled its expansion with $34.8 million in private venture capital. None of the company executives or directors, who hold 2.9 million of the 7.2 million shares outstanding, is selling their shares, the source said.

For the nine months ended Jan. 28, Staples rang up sales of $82.6 million compared with $24.7 million in the previous span. It narrowed its losses to $3.1 million for the nine months from $4.6 million a year earlier.

For the quarter ended Jan. 28, Staples posted a profit of $859,000 on sales of $34.8 million. That compares with a loss of $1.5 million on sales of $11.9 million the previous year. Comparable store sales, those open for at least nine months, showed a sales increase of 40.6 percent.

In the current quarter, however, Staples expects to post another loss, a source close to the company said, because of additional expansion costs.

If the stock offering goes through, Staples will become the third office products warehouse chain to go public since last June. Office Depot, Boca Raton, Fla., went public last June at $10 a share, and its stock closed April 4 at $25.75.

Last December, Office Club, Concord, Calif., went public at $10 a share. Its stock closed April 4 at $13.

PHOTO : Office products warehouses, like Staples, Boston, have caught on with Wall Street and the public.