The idea that traditional retail is dead seems to pop up every year; however, it never seems to come to pass. In fact, the past year and a half has proven just how resilient retailers are and how much they still have to give. Part of adapting to the modern era has been the decision to go public and file an IPO. Going public can create a windfall of opportunity that results in increased market share and record breaking profits. It could also backfire and expose a company that is poorly positioned in their market; a risk many are willing to take. The pandemic galvanized several companies into listing on a stock exchange and the landscape will never be the same.

In February of 2020 no one could have predicted the effects of a pandemic, yet all eyes were on the mattress company Casper (CSPR) and their IPO. The startup became a herald of the wild market that was to come and perfectly encapsulated the glory to be won on the stock exchange and the fallout that could ensue. Casper had grown their company into a sizable physical footprint to go along with their innovative delivery idea, though their race to the stock market left potential investors questioning the company’s future profitability. Their IPO was disastrous and came in well under expectations and the competitive mattress market was partly to blame. The potential was present for Casper; however, the opportunity and timing was not right. All of that changed just a month later due to an unprecedented pandemic.

Traditionally, established retail markets can be difficult to disrupt and attempts like Casper’s to gain ground can go awry. The pandemic was able to disrupt every industry across the board and created opportunities that would have never existed before. Petco (WOOF) had been a strong competitor in the pet industry, then statewide lockdowns caused the desire for online retailing to expand. Petco was able to leverage their large physical footprint and pivoted to pushing significant delivery options. The innovations and ability to adapt improved Petco’s future projections and they decided to strike while the iron was hot. Rival pet supplier (CHWY) was already public and their stock had been on a sharp rise. BarkBox (BARK), a subscription-based pet supplier, had also already moved forward with plans to go public. Petco went public in January of this year and the company performed well above expectation.  They avoided the pitfalls of Casper in part due to the disruption caused by the pandemic and their willingness to adapt and diversify against their competitors.

Interesting results from the latest #CSGpolls, with a majority of people against these companies going public.

The allure of financing through the stock market is hard to resist for retailers. For some it is a way to capitalize on their successes of the last year and others see it as a way to dig out of the hole they currently find themselves in. Casper competitor Mattress Firm has recently filed for an IPO and they are facing an uphill battle. Mattress companies have struggled due to supply chain issues and Mattress Firm has found itself in an even more unfavorable position as they do not produce any of their own goods. They have been left to the mercy of their suppliers and an IPO could potentially offer them a way out. Guitar Center is another major retailer that has filed for an IPO and their reasoning involves both success and failure. The company filed for bankruptcy in 2020; however, they have seen a sharp turnaround since then and the company is hoping to take that runaway success to the public sector. The jump from bankruptcy to IPO in less than a year would seem nearly impossible without the current volatile state of the economy. Retailers have struggled over the last year, yet they have also adapted and overcome. IPOs can offer them the chance to gain or lose a fortune and the opportunity appears to be too much to pass up. The number of surprise IPO filings will likely increase over the next year and will inevitably pull some companies back from the brink and give lesser-known newcomers the chance to excel.