Real Goods’ Stock Offering Set to Fund Retail Expansion
Published: Monday, December 01, 1997
UKIAH, CA—Sustainable living products company Real Goods Trading Corp. (RGTC) will close its third direct public-stock offering of 1.3 million shares within the next two months. With the offering price set at $5.50 per share, the company hopes to raise $6 million to fund its retail expansion plans. And according to founder and CEO John Schaeffer, “It shouldn’t be a problem selling it out.”
A pioneer in selling solar energy devices, sustainable lifestyle products and other renewable energy items, Real Goods originally catered to “the person living in the woods off the power grid,” according to Schaeffer. “We probably sold the first solar panel to consumers back in 1978,” he says.
Real Goods originally operated three small stores, but after Schaeffer sold his half of the business to his former partner in the mid-’80s, the company went bankrupt in 1985. Schaeffer took over the business after that and launched a mail-order catalog in 1986. Sales were just $18,000 in the first year; in 1996 the company posted $18.4 million in sales from its catalogs and retail outlets, or 1,000% growth in 10 years, according to Schaeffer.
The company opened its third store, a 5,000-sq.-ft. “urban demonstration center” for its mail-order catalog and energy-saving products in November. Another store is currently operated in Eugene, OR, and its flagship site, the Solar Living Center in Hopland, CA, attracts 150,000 visitors a year to its education/demonstration center and store. “We’d like to open stores in Boulder, CO; Seattle; Boston; and New York,” Schaeffer says.
While overall sales were relatively flat for 1Q98, sales were up 8% in 2Q, with catalog sales up 14% in the period. Retail sales were down 3%, due primarily, Schaeffer says, to the closing of a store in Amherst, WI. The company’s sales are seasonal, with sales and earnings increasing in its 3Q, which is the holiday season.
Real Goods first sold stock direct to the public in 1991, raising $1 million. In a second offering in 1993 the company raised $3.6 million. In its current third offering, “60% of our stock purchases have been off the Internet,” Schaeffer says. “We are the first company ever approved by the SEC for credit-card sales off a web site. There’s no exchange of paper documents; however, you can download a virtual stock certificate from the site.” The company’s website is at www.realgoods.com.
Real Goods is traded on the Nasdaq and Pacific stock exchanges. The stock’s 52-week range is $4 to $6.75—which it hit in September 1997. “We trade about 40,000 shares a month,” Schaeffer says. “The stock is not super-liquid, but investors can get in and out when they want. We have 10,000 shareholders and are tapping into new veins of investment interest where people can buy direct without dealing with brokers and where customers can become owners of companies they believe in.”