Shares of Baby Superstore Inc., dubbed "the Toys R Us of the baby industry" by one analyst, more than doubled in their first day of trading.
The company's shares soared 93% to $34.75 as investors embraced a company they believe is poised to capitalize on growing demand for baby products from parents who are more affluent but have less time to shop.
The shares traded as high as $38, an increase of 111% from the $18 that the initial public offering of about 2.7 million shares was priced at Monday.
More than 3.3 million shares changed hands on the Nasdaq, 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-based Baby Superstore is mimicking a strategy successfully employed in toys, home improvement, electronics and other product lines by so-called category-killer retailers.
The chain crams its shelves with cribs, baby strollers and other non-food 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 in fiscal 1994 and plans to open about 12 more this year.
Its sales for fiscal 1994, which ended Jan. 26, jumped 68% 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 45,00 square feet.
Baby Superstore "is taking away what was a decentralized industry for baby products and housing it all under one roof," said Ted Goins, an analyst at Branch Cabell & Co. "It's a natural killer category."
"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.