OTC Offering by Ross Stores Soon Sold Out

Ross Stores, a fast-growing Newark, Calif.-based off-price chain, on Thursday made an initial public offering valued at $51 million. Proceeds will be used for expansion of stores and the company’s distribution center and repayment of debt.

Morgan Stanley & Co. of New York, which co-managed the offering with Montgomery Securities, said the 3 million shares of Ross common stock, offered at $17 a share, sold out in the over-the-counter market. Of the shares offered, 1.8 million were being sold by the company and 1.2 million by certain shareholders. Ross will not receive any of the proceeds from the sale of shares offered by the selling shareholders, according to Morgan Stanley.

The stock closed at a bid price Thursday of $17.75.

Ross operates 81 stores, half of them in California, and plans to open eight new stores, including one in Huntington Beach, by the end of this month. Its West Hollywood store, which was destroyed in a gas explosion last March in the Fairfax district, is also scheduled to be reopened this month.

The chain plans to open an additional 13 to 15 stores by year-end and plans to buy and expand its distribution center in Newark.

Ross Stores, which was incorporated in California in September, 1957, was a six-store chain until it was purchased by an investor group in 1982. It sells name-brand apparel, shoes and bed and bath linen at 20% to 60% below the prices of most department and specialty stores.