Baby Superstore soars on first day of trading

September 28, 1994|By Bloomberg Business News

GREENVILLE, S.C. -- Shares of Baby Superstore Inc., dubbed "the Toys 'R' Us of the baby industry" by one industry follower, more than doubled in their first day of trading.

The company's shares soared 93 percent yesterday, to $34.75, as investors embraced a company they believe is poised to capitalize on growing demand for baby products from more affluent parents strapped for shopping time.

The shares traded as high as $38, an increase of 111 percent from the $18 a share that the 2.7 million shares were priced at on Monday in its initial public offering (IPO). More than 3.3 million shares changed hands on the Nasdaq Stock Market yesterday, making it the 10th-most active issue on U.S. markets.

"As the first superstore based on kids to have an IPO, there's an appetite for it," said Jean-Michel Valette, senior vice president of research at Hambrecht & Quist Inc.

Greenville, S.C.-based Baby Superstore is mimicking a strategy successfully employed in toys, home improvement, electronics and other product lines by so-called category-killer retailers.

But Baby Superstore crams its shelves with cribs, baby strollers and other nonfood products for youngsters. Most of its offerings are aimed at newborns and children up to 3 years old.

The company operates 41 superstores in 13 U.S. states, primarily in the Southeast and Midwest. It has opened three superstores so far in fiscal 1994 and plans to open about 12 more this year. The company has stores in Laurel and Catonsville, and it expects to open a Glen Burnie location next month.

Its sales for fiscal 1994, ended Jan. 26, jumped 68 percent to $104 million, from $63.1 million a year earlier.

Each superstore has about 23,000 feet of selling space, dwarfing the specialty shops and baby departments of department stores. The retailer said it expects its future stores to measure 30,000 to 45,000 square feet.

"Baby Superstore is going to be the Toys 'R' Us of the baby industry," said Claudia DeSimone, publisher of Juvenile Merchandising magazine, a unit of Columbia Communications.

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