Gordmans Stores: A Solid Retailer Goes Public Attractively Priced

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Bill Simpson

This analysis of Gordmans Stores ( GMAN ) was provided to TradingIPOs subscribers in advance of its Wednesday, August 4, IPO. The company sold 5.4 million shares for $11 each, raising about $58.9 million. It had planned to sell shares for $13 to $15 each.

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Gordmans Stores plans on offering 6.2 million shares (assuming over-allotments are exercised) at a range of $13-$15. Insiders will be selling 3 million shares in the deal. Piper Jaffray and Wells Fargo are leading the deal, Baird and Stifel co-managing. Post-IPO GMAN will have 18.7 million shares outstanding for a market cap of $262 million on a pricing of $14. IPO proceeds will be used for debt repayment and general corporate purposes.

Sun Capital Partners will own 67% of GMAN post-IPO. Sun Capital acquired a 100% stake in GMAN in 9/08 for total considerations of just $55.7 million. Of this, $32.5 million was debt on the back of GMAN. That debt will be paid off on IPO.

From the prospectus :

'Gordmans is an everyday low price retailer featuring a large selection of the latest brands, fashions and styles at up to 60% off department and specialty store prices every day in a fun, easy-to-shop environment.'

Growth Financials FY '09 (ending 1/30/10) FY '10 (ending 1/31/11) Conclusion TGT ROST

  1. GMAN is expected to grow 14% by my conservative 2010 estimates, while the other discounters are growing 4%-8%;
  2. GMAN only has 68 stores in existence, leaving a lot more room for store growth than those other discounters.

This is a solid retailer coming public attractively priced.

Disclosure : At date of this post [8/20], tradingipos.com is long GMAN.

See also Best Buy Reports Tuesday: Will It Regain Its Footing? on seekingalpha.com



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: GMAN , ROST , TGT , TJX

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