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Law360 (February 16, 2021, 6:03 PM EST) -- Private equity-backed fabric and crafts retailer Joann Inc. and crafting machines maker Cricut Inc. filed initial public offering plans on Tuesday, gearing up to tap a hot IPO market following a surge in business since the coronavirus pandemic.
Joann is advised by Latham & Watkins LLP while Cricut is advised by Wilson Sonsini Goodrich & Rosati PC. Both crafts-related companies listed fundraising targets of $100 million in filings Tuesday with the U.S. Securities and Exchange Commission. The offering sizes could grow, as $100 million is often a placeholder figure used to calculate fees. Both offerings could price sometime in March, based on a typical IPO schedule.
Hudson, Ohio-based Joann sells sewing products and related arts and crafts through some 855 stores and online, according to its registration statement. The company caters to do-it-yourself customers who like to paint, draw, sew, quilt and knit among other creative endeavors that it says are booming in the current economy.
"Our momentum through the COVID-19 pandemic has been further supported by heightened DIY customer behavior, significant increases in the number of new and current customers participating in new categories and the continued rise of online marketplaces," Joann told the SEC in its registration statement.
Joann, which generated net income of $174 million on $1.9 billion in revenue for 39 weeks ending Oct. 31, 2020, said it will spend IPO proceeds on general corporate purposes while its investors may also sell shares in the offering. Joann's top investors include private equity firm Leonard Green & Partners and entities affiliated with TCW Group and Crescent Capital Group.
Joann also disclosed various risks in its registration statement, noting that changes in U.S. trade policies could harm its business given that the company relies on suppliers in China and other Asian countries. Joann also noted that positive business trends stemming from the coronavirus pandemic — its revenue rose 24% in the 39 weeks of 2020 compared with the same period in 2019 — may not be sustainable as public health circumstances improve.
Utah-based Cricut makes electronic machines, apps and accessories its customers use to craft handmade goods including personalized birthday cards, mugs, T-shirts and interior decorations. Cricut is also experiencing rapid growth, reporting $93.1 million in net income on $588.1 million in revenue in the first nine months of 2020, almost double prior-year revenue at that time.
Cricut has witnessed significant growth since the pandemic but cautioned that "there can be no assurance that online sales will remain at these levels in the future," according to its registration statement. Cricut plans to spend IPO proceeds on working capital and related expenses.
Joann and Cricut are going public amidst a strong IPO market that has seen scores of operating and blank-check companies raise money early this year following a robust 2020. Dating app Bumble last week raised $2.15 billion in an IPO while Korean e-commerce giant Coupang on Friday filed a $1 billion IPO that could price in March.
Shares of Joann will trade on the Nasdaq exchange under the symbol "JOAN" while shares of Cricut are slated to trade under "CRCT."
Joann is represented by a Latham team led by partners Howard Sobel, Greg Rodgers, Jason Silvera and Drew Capurro.
BofA Securities Inc., Credit Suisse Securities (USA) LLC, Guggenheim Securities LLC, Barclays Capital Inc., Wells Fargo Securities LLC, Piper Sandler & Co., and William Blair & Company LLC are lead underwriters for Joann's offering.
Joann's underwriters are represented by a Simpson Thacher & Bartlett LLP team led by partners William Brentani and David Azarkh.
Cricut is represented by a Wilson Sonsini team led by Katharine Martin, Rezwan Pavri and Richard Blake.
Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC, Citigroup Global Markets Inc., Barclays, and Robert W. Baird & Co. Inc. are underwriting Cricut's IPO.
Cricut's underwriters are represented by a Gibson Dunn & Crutcher LLP team led by Jeffrey Chapman and Stewart McDowell.
CORRECTION: An earlier version of this story misstated Joann's net income and Cricut's revenue. The errors have been corrected.
--Editing by Emily Kokoll.
For a reprint of this article, please contact reprints@law360.com.
