Storage retailer The Container Store has filed for an IPO. The company plans to list on the NYSE under the ticker “TCS” and the lead underwriters include J.P. Morgan (JPM), Barclays (BCS), Credit Suisse (CS), Morgan Stanley (MS), BofA Merrill Lynch (BAC), Wells Fargo Securities (WFC) and Jefferies.
Back in 2007, The Container Store sold a majority stake to private equity firm Leonard Green & Partners LP. At the time, the retailer had about $600 million in sales and 39 stores.
And since then, The Container Store has continued to grow at a nice pace, despite the financial crisis. There are now 61 stores in 22 states and comparable-store sales have increased for 13 consecutive quarters. For fiscal 2012, sales came to $706.7 million, up 11.5%.
The typical Container Store location has about 19,000 selling square feet and includes about 10,500 unique stock keeping units sourced from approximately 700 vendors around the world. Some of its products include countertop organizers, cabinet storage, specialty boxes, packing material, garment racks, hangers, garage systems, glass food storage and gift wrap. For the most part, target customers are affluent, highly educated and busy women.
But the retail chain isn’t the only part of TCS. The company also operates Elfa, which is based in Sweden. Elfa designs component-based shelving and drawer systems for the US stores as well as distributors and retailers in over 30 other countries. The business generated $94 million in fiscal 2012.
How has The Container Store managed to find success? Well, the co-founder and CEO of the company, William A. “Kip” Tindell, thinks the key has been the operating philosophy. In a letter for the S-1, he summed it up as follows:
“I would have to say that first and foremost we’re an employee-first, yummy company. ‘What does it mean to be yummy?’ might be your next question.
“[At] The Container Store we have found that if you take better care of the employees than anybody else, they really will take better care of the customers than anybody else. It’s actually about creating this one-of-a-kind experience, where we operate our business with a focus on all of our stakeholders — but with our employees first.”
Yet this is more than just words. Consider that each new full-time store employee receives more than 260 hours of formal training, in addition to flexible work schedules and comprehensive benefits. As a result, TCS’s turnover rate is only 10% per year, which compares to the industry average of more than 100%.
And finally, it still looks like TCS’s prospects are still in the early stages, even though the company was launched in 1978. Keep in mind that it believes the market potential in the US is at least 300 stores — five times as many as the company operates now.
With prospects like that, a Container Store IPO could be very yummy, indeed.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.