RedEnvelope seeks $27.7 million in initial public offering of stock
RedEnvelope Inc., which retails upscale gift items through RedEnvelope.com, is seeking $27.7 million after underwriting costs through an initial public offering of 2.2 million shares at $14 per share, the company said. It said it could realize as much as $32.1 million if its underwriters fully exercise an option to purchase an additional 330,000 shares to cover any over-allotments. The shares were quoted on the Nasdaq market beginning today.
In its prospectus for the offering, RedEnvelope said it would use approximately $6 million of the proceeds to build up its inventory in time for this year’s holiday shopping season as well as for other working capital purposes. It said it would use about $5 million to pay for new capital equipment and information technology projects, but declined to be more specific. The remainder of the proceeds will be used for general corporate purposes, it said.
WR Hambrecht & Co. serves as the managing underwriter, with Pacific Crest Securities serving as a co-manager of the offering.
RedEnvelope.com is listed among Internet Retailer’s 2003 Best of the Web – Top 50 online retail sites and is one of the more successful upscale gift retailers. Although it also sells through catalogs, it processes 70% of its orders through the web, the company says.
"We believe that substantial opportunities exist to grow our business, increase our revenues and achieve profitability," it says in its prospectus. To realize such gains, it says, it will improve marketing efficiency by focusing on the retention of existing customers and emphasizing multiple online marketing programs; continue to present a merchandise mix that includes 50% new products each year; improve fulfillment processes and costs; and implement selective online marketing campaigns to acquire new customers while leveraging its brand.
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