Source: LOHAS Weekly Newsletter
Published: Monday, December 01, 1997

BOULDER, CO—Ever-expanding Wild Oats Markets Inc. (OATS), based here, filed with the SEC in November for a secondary stock offering of 2.1 million shares and also announced a three-for-two stock split.

The stock offering includes nearly a million shares currently held by stockholders including OATS CEO Michael Gilliland and Executive VP Libby Cook. Weston Presidio Offshore Capital C.V. of San Francisco is putting all its stock up for sale. Weston has a 7.6% stake in OATS. OATS also will sell an additional 320,788 shares as part of an over-allotment option.

Managing underwriters for the offering are Smith Barney Inc., PaineWebber Inc., Piper Jaffray Inc. and Dain Bosworth Inc.

Proceeds from the sale will fuel OATS’ aggressive growth strategy. Plans are to spend between $20 million and $25 million in capital expenditures in FY98, the company says. The money, which does not include any acquisitions OATS may make, will go toward new-store development, remodeling and maintenance.

OATS told the SEC that average expenses for a new store, including leasehold improvements and equipment, have averaged between $1 million and $2 million over the past two years. Inventory for new stores typically costs about $500,000, but the company relies on vendor financing for most of this cost. Preopening costs are about $250,000 per store.

Among the projected new-store openings for 1998 are Tempe, AZ; Denver, Westminster and Fort Collins, CO; Pinecrest and Kendall, FL; Columbus, OH; Kansas City, MO; Princeton, NJ; Hinsdale, IL; and Santa Monica, CA. Its most recent store opening was in Buffalo Grove, IL, a suburb of Chicago.

OATS’ three-for-two stock split is payable Jan. 7, 1998, to holders-of-record on Dec. 22.

Adams, Harkness & Hill Analyst Kim Galle says announcing the secondary offering and the stock split nearly simultaneously is not surprising.

“It makes sense because they have picked up a couple of retail houses (Piper Jaffray and Dain Bosworth) for their coverage. Retail likes to pay less for stock, and this makes shares more attractive to those investors,” he says.

In 1997 OATS stock recorded a low of $12.78/share and a high of $43.50/share. At the end of November it was trading at $41.50/share.