BURLINGTON, N.J. (AP) — Shares of Burlington Stores Inc. soared in their trading debut Wednesday, underscoring investors' appetite for a stake in retailers who sell popular brands at deep discounts.
In afternoon trading, its shares rose $8.40, or 49.4 percent, to $25.40.
The discount retailer sold 13.3 million shares of common stock for $17 per share in an initial public offering that raised about $226.1 million.
It also granted the offering's underwriters a 30-day option to buy up to 2 million more shares, which would raise an additional $34 million.
The shares are trading on the New York Stock Exchange under the symbol "BURL."
The strong debut comes as venerable chain, which competes with the likes of T.J. Maxx and Ross Stores Inc., has found itself in the sweet spot of the slow recovery: it sells coats and other clothing at deep discounts to top brands, appealing to still shoppers still smarting from the recession.
"It has many famous name labels and it has a good reputation," said Walter Loeb, a New York-based retail consultant. "I am not surprised that it is surging."
The chain's roots go back to 1924 when it was founded as Burlington Coat Factory, a maker of women's coats and outerwear. The company was incorporated in 1972 as Burlington Coat Factory Warehouse Corp. when Monroe Milstein and his wife, Henrietta Milstein, started selling coats and outerwear from a single outlet in Burlington, N.J. The company then began to gradually expand with other outlets while moving into other areas like sportswear, suits, and toys.
Monroe Milstein sold the company in 2006 for a little over $2 billion to the private equity group Bain Capital Partners. Henrietta Milstein died in 2001.
Since 2006, Burlington has added an average of 23 stores per year for a current total of 503, spanning 44 states and Puerto Rico. In the latest year, the company reported a loss of $25 million on total revenue of $4.16 billion for the year ended Feb. 2.
Thomas Kingsbury, CEO of Burlington, couldn't be reached for an interview.
After discounts, commissions and expenses, Burlington says it expects to net $205 million in proceeds, which it plans to use to pay off debt.