DTLR, formerly known as Downtown Locker Room, plans to sell up to $75 million in stock in an initial public offering, according to a filing with the Securities & Exchange Commission.
The urban chain, based in Hanover, MD, said in the filing it plans to use the proceeds to redeem preferred shares, repay $51.1 million under a term loan facility and for other general corporate purposes.
DTLR has grown its store base from 68 at the end of fiscal 2009 to 95 stores currently. Its comparable store sales increased 4.3 percent, 7.3 percent, and 3.9 percent in fiscal 2010, fiscal 2011 and fiscal 2012, respectively. Net sales increased from $135.0 million in fiscal 2009 to $181.5 million in fiscal 2012, representing a compound annual growth rate of 10.4 percent. Over the same period, DTLR’s operating income increased from $7.5 million to $13.4 million, representing a compound annual growth rate of 21.4 percent. Sales per square foot were $2,171 in 2012.
In the In the six months through Aug. 3, sales rose to $101.4 million from $92.8 million. Net income after payments to preferred stockholders was $536,000 against $1 million a year ago. Adjusted EBITDA improved to $12.1 million from $10.8 million. Comps rose 7.9 percent against a 2.9 percent increase in the year-ago quarter.
It expects to open 10-12 stores in fiscal 2014 and will target an approximately 12 percent annual store count growth rate over the next several years. The focus will be on opening stores in existing markets, as well as new markets, focused on the Mid-Atlantic and Southeastern U.S.
DTLR believes it benefits from its positioning as the leading destination retailer of street-inspired fashion footwear, apparel and accessories in its markets.
DTLR said in its prospectus, “We provide a one-stop shopping experience that addresses our consumers' desire to dress “from the shoe up.” We offer regular releases of limited-availability merchandise from Nike and Brand Jordan as well as merchandise from other sought-after brands including Adidas, Levi's, New Balance, Timberland and UGG Australia. Up-and-coming brands available in our stores include Akoo, Filthy Dripped, Hudson Outerwear and Pink Dolphin. Although our core consumer is an image-conscious male between the ages of 14 and 24, we believe our distinctive product offering appeals to a broader consumer group that seeks to emulate a street-inspired lifestyle. In addition, we have a meaningful and growing kid's footwear business that expands our addressable market, drives store traffic and helps us cultivate the next generation of DTLR consumers.”
Nike and Brand Jordan represented 47.3 percent of its net sales in fiscal 2012.
Baird and Piper Jaffrey are the lead underwriters for the stock offering. DTLR stock will trade on NASDAQ under the ticker symbol “DTLR.”