Wall Street finds Teavana's IPO hits the spot

Investors are mighty thirsty this week. Teavana Holdings shares bubbled up more than 66 percent in an initial public offering Thursday, a day after Wall Street gulped down Dunkin’ Brands debut.

Teavana shares were priced at $17 Wednesday night, well above the $13 to $15 range the company originally estimated, raising more than $100 million for the company and its owners. After trading opened Thursday the shares climbed $10.80, or 64 percent, to close at $27.80.

The Atlanta-based company sells loose-leaf teas and an array of accessories, from $25 glass tea tumblers to a $150 hot water dispenser from the Japanese housewares maker Zojirushi. There are 161 Teavana stores in the U.S., and the company has laid out plans to grow to 500 locations staffed by “knowledgeable teaologists” by 2015. The company's website, Teavana.com, brings in 7 percent of sales.

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Shoppers at Teavana plunk down an average of $36 each time they go to the cash register, which has helped push Teavana’s revenue to $124.7 million in 2010, nearly 40 percent higher than in 2009. Net income more than doubled to $12 million, according to the prospectus Teavana filed with the Securities and Exchange Commission.

The IPO puts Teavana market value at more than $1 billion. That’s smaller than Dunkin’s $3.4 billion market cap and weaker than decaf next to mighty Starbucks, whose valuation tops $30 billion. The tea seller sees plenty of room for growth in the U.S., which it says makes up just 9 percent of the world’s tea market, putting America at No. 22 on a list of loose-leaf and bagged tea consumption.

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Dan Geiman, an analyst at McAdams Wright Ragen, said that between the Dunkin’ IPO and stellar earnings from Green Mountain Coffee Roasters Wednesday, investor interest in coffee is piping hot. “Some of that is probably pouring over into Teavana’s success today,” Geiman said.

After the offering, Teavana Chief Executive Officer Andrew Mack still owns about 58 percent of company shares and a private equity firm holds about 20 percent.

Teavana’s stock trades on the New York Stock Exchange under the ticker symbol “TEA.” 1