HomeGrocer files to deliver on the Street
The online supermarket ups the ante in its battle with Webvan, filing for its own initial public offering.
The Kirkland, Wash.-based company did not specify the number of shares it plans to sell or set a price range for them in its regulatory filing. For the purpose of determining a filing fee, the company said it planned to raise up to $250 million.
The filing comes on the heels of archrival Webvan's successful IPO last month, through which the Foster City, Calif.-based company raised $375 million. Backed by big money and high-profile investors, both companies plan to expand aggressively in the near future.
HomeGrocer, which is backed by Amazon.com, venture firm Kleiner Perkins Caufield & Byers and Jim Barksdale, plans to open operations in eight to 10 new markets around the nation by the end of next year, according to the regulatory filing. HomeGrocer now operates in Seattle; Portland, Ore.; and Orange County, Calif.
Meanwhile, Benchmark Capital-backed Webvan plans to go from serving solely the San Francisco Bay area to offering its products in 26 new markets, including Atlanta and Seattle in the next two years.
But it remains to be seen whether the broader market will embrace online grocery stocks. Although Webvan's shares have jumped as high as 34, they were trading today at 19.69, within shouting distance of their $15 per share IPO price. Peapod, which announced last month that it may face a cash shortfall next year, hovered around 7.69 this morning, less than half its 52-week high of 16.37.
HomeGrocer lost $39.1 million for the 39 weeks ended Oct. 2 on $10.9 million in revenue. For the comparable period last year, the company lost $4.8 million on $299,000 in revenue.
Although grocery shopping is normally thought of as a narrow margin business, HomeGrocer saw its top line improve from an $18,000, or 6 percent, profit margin over the 39-week period last year to $1.96 million, or 18 percent, over the same period this year.
In contrast, Webvan lost $60.5 million for the three months ended Sept. 30 on $3.8 million in sales. For the year, Webvan has lost $95.6 million on $4.2 million in revenue.
Unlike HomeGrocer, Webvan's operating margins have been quite narrow. For the year, the company's gross profit has been $325,000, or 8 percent of its sales.
Morgan Stanley Dean Witter is leading HomeGrocer's public offering, assisted by Donaldson Lufkin & Jenrette, Hembrecht & Quist, Banc of America Securities and J.C. Bradford. HomeGrocer has applied to trade its shares on the Nasdaq stock market under the ticker symbol "HOMG."
Amazon currently owns 27.56 percent of HomeGrocer, according to the filing. Other notable shareholders include Kleiner Perkins, which owns 13.8 percent; Hummer Winblad Venture Partners, 13.63 percent; co-founder Terry Drayton, 6.21 percent; chief executive Mary Alice Taylor, 5.98 percent; and the Barksdale Group, 5.61 percent. The company did not say what stake each company and individual would hold after its public offering.
Martha Stewart also has invested in HomeGrocer; the document did not disclose the size of her stake in the company.
In related news, Pets.com, which also is backed by Amazon and Hummer Winblad, filed for a public offering earlier this week.