Ernst Plans Stock Offering, Addition Of 55 Superstores
Ernst Home Center Inc. plans to go public and expects to raise $50 million through a stock sale that it will use to add about 55 superstores over the next three years.
The move would give the Seattle-based home improvement chain - owned by NBL Life Assurance Corp. of Newark, N.J. - a total of about 120 stores by the end of fiscal 1996.
Ernst's decision likely came in response to stepped-up competition in the home-improvement market in recent years, thanks to pressure from warehouse-style chains such as Eagle Hardware, HomeBase and Home Depot.
Seattle-based Eagle and Atlanta-based Home Depot, a national powerhouse, are expanding aggressively and seem to have targeted the Northwest for a showdown.
Most of their stores are in the 100,000-square-foot-plus range, while Ernst's older stores are in the 30,000-square-foot range. Ernst's superstores are about 60,000 square feet.
"I think it's important for their long-term viability just to be as competitive as they can," said retail analyst Jeff Atkin, with Kunath, Karren, Rinne & Atkin. "I think it's important just to get the financing in place."
The company operates 77 stores in eight states: Washington, Oregon, Idaho, Utah, Nevada, Montana, Wyoming and Colorado. Twenty are superstores, which the company began opening in 1991. The privately owned company does not disclose finances, but last year's sales were estimated by analysts at around $400 million.
The stock offering is expected to be underwritten by Morgan Stanley & Co. and Donaldson, Lufkin & Jenrette Securities.
Ernst has opened superstores recently in Lynnwood and Lake Stevens. Most of its new stores will be in the superstore format.
The offering is subject to Securities and Exchange Commission review, which normally takes about 45 days.
Ernst, which says it is the Northwest's oldest home center chain, was founded in 1893 as part of the Pay 'n Save Corp. Pay 'n Save was a public company that was broken up and sold several years ago.
Published Correction Date: 06/07/94 - Ernst Home Center Was Founded As An Independent Store In 1893, Not As A Part Of Any Other Company. Its Current Owner Is Mbl Life Assurance Corp.
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