Pet food and accessory retailer Chewy entered the final stage of its initial public offering (IPO) on Monday when it launched its roadshow in advance of its upcoming market debut.
In an updated S-1 filed with the Securities and Exchange Commission (SEC), Chewy — a subsidiary of privately held PetSmart — said it will offer 41.6 million shares of its Class A common stock to the public. About 87% of those are insider shares being offered by PetSmart rather than Chewy. The shares will be priced in a range of $17 to $19 per share, which would raise about…
$749 million at the midpoint of the range.
In addition, PetSmart will own 278.4 million shares of Class B common stock, which will represent approximately 70% of all shares of common stock and approximately 77% of the combined voting power of both classes. Chewy is listing with a dual class structure that enables company owners to maintain control even after it becomes public. Also, the underwriters will have the option to sell an additional 6.24 million shares of Class A stock, depending on the total demand for the shares.
The overall offering would value Chewy at roughly $7.6 billion using the midpoint of the pricing range.
On the road again
Chewy hasn’t yet divulged the date for its IPO, but the announcement of the roadshow typically signals the public debut is about two weeks away.
For the uninitiated, the roadshow is a series of financial presentations given by company execs to institutional investors. Management lays out the case for the company, how it has fared financially, and the size of the market opportunity. By doing so, it hopes to drum up interest in the stock and drive up the price of the shares in advance of the offering.
The company has already disclosed that Chewy stock will be traded on the New York Stock Exchange under the ticker symbol CHWY.
Revenue is soaring — profit, not so much
For fiscal 2018, Chewy generated revenue through its website, Chewy.com, of $3.53 billion, up 68% year over year, after doubling its revenue each year from 2014 through 2017. Gross margins improved from 17.4% of sales in 2017 to 20.2% of sales in 2018.
Chewy attributes its growth to a combination of…
Continue reading at THE MOTLEY FOOL