HomeClub’s Initial Stock Offering Raises $18 Million
Increasing competition among home-improvement retailers spoiled HomeClub Inc.'s debut this week as a public company, as the Fullerton-based chain raised about $13 million less than it originally expected from its initial public stock offering.
The offering, which saw 2 million shares sell for $9 each, raised about $18 million for the rapidly growing 2-year-old company. However, company executives had earlier expected to sell 2.25 million shares at $14 to $16 each.
“There’s an awful lot of competition among home improvement outlets in California,” explained Ron Rotter, a retailing analyst with Seidler Amdec Securities Inc. in Los Angeles. “In fact, there are too many home-improvement operations in the state for the size of the market. You can only sell so many hammers.”
Rotter said investors have sensed a potential shakeout and have become wary about the home-improvement retail market.
HomeClub officials have said they may be forced to hold a second stock offering or seek loans to finance the company’s ambitious expansion plans for the next 18 months. The company, which already operates 15 stores, plans to add three stores by the end of the year and open an additional 18 in 1986.