Volcom Goes Public
Volcom Inc. performed an ollie over Wall Street in its initial public stock offering, which surged 41 percent from the opening price.
On June 30, its first day of trading on the NASDAQ, the Costa Mesa, Calif.–based maker of action-sports clothing opened at $19 a share and climbed to $31.20 before closing at $26.77. Its market value totaled $625.3 million.
The solid debut underscored the mainstream acceptance and anticipated growth of skate, surf and snowboarding companies. The IPO also defied the declines in both the New York Stock Exchange and the NASDAQ, which were dragged down by the Federal Reserve’s decision to raise a key interest rate.
“It’s following on the heels of Zumiez,” said Richard Peterson, who is chief market strategist at New York’s Thomson Financial and tracks IPOs and other financial activities, in reference to the May 6 IPO for Everett, Wash.–based action-sports retailer Zumiez Inc. Peterson said Volcom’s IPO represents the third-best debut for an IPO so far this year, following financial firm International Securities Exchange Inc. and energy company PRB GasTransportation Inc.
Volcom Chief Executive Officer Richard Woolcott declined to comment through his secretary, who cited the 30-day “quiet period” following the IPO.
Volcom offered approximately 4.7 million shares to raise $89.1 million. Of that amount, it will receive approximately $74 million. It said it plans to use $20 million from the offering to distribute its estimated undistributed corporate earnings to existing stockholders and spend about $4 million to develop its European infrastructure.
Ever since Volcom announced in late April that it would go public, interest in its IPO has been building not only on Wall Street but also in the tribe-like board-sports industry. Retailers such as Laguna Surf & Sport have said they are “super-stoked” for the top-selling apparel company. Volcom was named Manufacturer and Women’s Brand of the Year by members of the Surf Industry Manufacturers Association and 600 retailers in May. Volcom’s underwriters—Wachovia Securities, D.A. Davidson & Co. and Piper Jaffray—raised the offering price to $19 from the initial range of $15 to $17. In its first prospectus filed with the Securities and Exchange Commission, Volcom originally expected to raise as much as $86.3 million.
Volcom’s financial performance helped burnish its profile on Wall Street. Net income nearly doubled year over year on growing revenue. In 2004, Volcom earned $24.6 million on revenue of $113.2 million. In the first quarter of 2005, the company reported net income of $6.3 million on revenue of $31.7 million, compared with net income of $3.2 million on revenue of $21.2 million in the year-ago period.
Following the IPO, the 39-year-old Richard Woolcott will own about 21 percent of the approximately 23.4 million outstanding shares. His 73-year-old father, Reneacute; Woolcott, who provided $5,000 to start the company in 1991, is chairman of the board and holds a 20 percent stake. At the June 30 closing price, Reneacute; Woolcott’s share of Volcom is valued at about $125.2 million, whereas Richard Woolcott’s portion is worth about $133.5 million.
