Plans to open 50 stores over the next two years
Zany Brainy, the multimedia children's chain store, has filed a registration statement with the Securities &Exchange Commission stating its plans to issue an initial public offering through which it hopes to raise approximately $98 million. The company reported it will use the net proceeds to repay bank debt, open new stores and implement new software programs. The balance of the proceeds will be used for working capital and general corporate purposes.
According to the prospectus, 1999 will be a busy year for the company. In addition to opening 25 new stores, including 14 in new markets, Zany Brainy plans to close its two existing warehouses (providing a total of 180,000 sq. ft.) and open a new 250,000-sq.-ft. facility in Swedesboro, N.J., this summer. The company also plans to relocate its headquarters to a 52,000-sq.-ft. location in King of Prussia, Pa. As of January 30, Zany Brainy had a total of 2000 employees, 729 of them full-time.
The company anticipates that its capital expenditures in the year will be about $17 million, with the majority being used to open new stores. The company said that it costs about $780,000 to open a new outlet. Its prototype store is 10,600 sq. ft., selling more than 15,000 items, including approximately 7000 children's titles. To streamline its book-buying efforts, in mid-1998 Zany Brainy made Ingram Book Co. its principal book supplier. Book purchase represented 12% of the company's total purchases last year.
Since it opened its first store in 1991, Zany Brainy has had steady growth, with sales hitting $168.5 million for the fiscal year ended January 30, 1999. Fiscal '99 also marked the first year Zany Brainy recorded a profit, reporting net income of $9 million. The financial improvement was due to the opening of 23 new outlets as well as comparable store gains of 9.9%. The company ended the fiscal year with 75 stores. In addition to opening 25 stores this year, Zany Brainy expects to open 25 more outlets in fiscal 2001.
