Volcom IPO Priced Above Forecast

By Leslie Earnest

June 30, 2005 12 AM PT

Times Staff Writer

Surfwear maker Volcom Inc. priced its initial public offering at a higher-than-expected $19 a share, Reuters reported Wednesday, citing an underwriter.

The Costa Mesa company, which said in an earlier regulatory filing that it planned to sell 4.7 million shares at $15 to $17 a share, declined to comment on the IPO pricing.

The stock is expected to begin trading today on Nasdaq under the ticker symbol VLCM.

IPO experts say surf and skate apparel retailer Zumiez Inc.’s strong initial public offering in May drew attention to the industry and may have boosted expectations for Volcom. Shares of Everett, Wash.-based Zumiez, which began trading at $18 on May 6, closed at $30.57 on Wednesday -- up 70% from the offering price.

“Probably those who felt they missed the boat on Zumiez, they’ll go in on Volcom,” said Richard Peterson, market strategist with Thomson Financial.

Though the overall IPO market slumped in the first part of the year, companies that went public in the second quarter have seen their stocks rise an average of 12%, Peterson said.

Many companies have priced their shares at the low end of the expected range or even lower, in some cases presenting opportunities for investors, said Tom Taulli, co-founder of CurrentOfferings, an IPO research firm in Newport Beach.

Taulli was optimistic about Volcom’s first day of trading. “If you see strong pricing like that it usually means you’ll have a strong first day performance.”

Volcom was founded in 1991 by Chief Executive Richard Woolcott with his friend Tucker Hall, who no longer works there.

Sales climbed to $113 million last year while profit hit $24.6 million, a 72% jump from the previous year.

A strong showing by Volcom could tempt other apparel makers in the niche to consider their own offerings, IPO experts say. But there aren’t many businesses with the heft to make such a move, according to surfwear industry insiders.

More likely, larger players will continue to snap up the smaller companies, said Paul Altman, vice president of Sage Group, an investment banking firm in Los Angeles that represented DC Shoes in its sale to Quiksilver Inc.

“Obviously going public is one option, but so is the [mergers and acquisitions] market,” Altman said.