Mecox Lane's stock surges in its trading debut

AP News
Posted: Oct 26, 2010 5:28 PM
Mecox Lane's stock surges in its trading debut

Mecox Lane Ltd. soared in its first day of trading Wednesday.

The Chinese clothing and accessories company added $6.26, or 57 percent, to $17.26 in on the Nasdaq Global Market.

Earlier in the day Mecox said it raised approximately $106.9 million from the American depositary shares it offered in its initial public offering.

The IPO was priced at $11 per ADS, with each ADS representing seven ordinary shares.

Mecox disclosed in a Monday regulatory filing that it was offering about 9.4 million ADSs. The selling shareholders offered approximately 2.3 million ADSs, raising about $22.3 million. Mecox didn't receive any proceeds from the shareholders' offering.

Mecox previously said that it planned to use about $15 million of the offering's proceeds to update its website, management information system software and hardware including servers and computers. Another $29.5 million will be used to help build part of a new logistics center and warehouse. The company plans a new logistics center for Jiangsu Province.

Mecox also said about $6.5 million would be used to open about five company-run stores and about 20 franchised stores this year. Whatever money is left of the $6.5 million will be used to improve existing stores and to open more stores in the future.

Leaving the Left
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Remaining funds will be for working capital and other corporate purposes.

The underwriters were given the option to buy up to 571,429 additional shares from the company and an additional 1.2 million shares from certain selling shareholders to cover excess demand.

The company also said Monday that it expected about 11.7 million outstanding American depositary shares immediately after the offering and approximately 399.2 million outstanding ordinary shares immediately after the offering.

Mecox, which targets young urban female shoppers, had 2009 net income of $7.2 million and revenue of $177.7 million.

The stock trades under the "MCOX" ticker symbol.