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Some of Vancouver-based Article's furniture offerings.Handout

Home furniture retailer Article, one of Canada’s most successful online-only merchants, has delayed its plans to go public amid a sharp selloff of tech stocks to start 2022.

The Vancouver company, legally known as TradeMango Solutions Inc., engaged underwriters JPMorgan Chase & Co., Goldman Sachs and BMO Capital Markets last year to explore listing on the Nasdaq Stock Market, The Globe and Mail reported in December. It was originally planning to file a prospectus with the U.S. Securities and Exchange Commission later this month.

But worsening market conditions have prompted Article to delay the kickoff of its initial public offering process to March, two sources familiar with the situation said. The Globe and Mail is not identifying the sources as they are not authorized to speak publicly on the matter.

A spokesperson for Article declined to comment.

Tech stocks have extended recent declines into the new year, as the Nasdaq Composite Index sustained its largest weekly drop in 11 months last week. The Nasdaq started this week with further losses as the spectre of rising interest rates weighed on valuations of riskier assets.

If it does proceed, Article would be the latest in a string of North American online merchants to go public in recent quarters, including shoe seller Allbirds Inc. and eyewear retailer Warby Parker Inc. British online furniture retailer Made.com Group PLC also went public last year.

Article expected its planned IPO would raise about US$200-million, mostly as a secondary offering in which existing investors and option holders – it has more than 1,100 employees – would sell parts of their stakes. Article would issue little or no equity itself in the offering; it is profitable and doesn’t need cash.

Article chief executive officer Aamir Baig shed some light on the company’s thoughts about going public during an interview with The Globe in September, 2020. “Going public is a consideration that gets thrown around in our circles,” he said then, adding: “The only primary driver [of an IPO] will not be raising capital to finance our strategic road map, it’s purely to create a liquidity platform for our shareholders and stock option holders.” Becoming a publicly traded company would mean holders of options and shares could freely trade them on the stock market.

Article is one of Canada’s largest online-only consumer products merchants, with annual revenue running at about US$500-million. It was founded in 2011 by Mr. Baig and three other engineers, who saw an opportunity in the upscale furniture business, where commissioned salespeople; showrooms full of expensive, high-margin items; and long delivery times were the norm. Their idea was to target digitally savvy millennials, enabling them to furnish their homes with well-built but reasonably priced mid-century and Scandinavian-styled furniture with a few clicks.

They set out to build a company where they would design products, source materials and work with Asian manufacturers to assemble products and then distribute them from their own warehouses (it has distribution centres in Seattle, Los Angeles, Florida, New Jersey and Toronto). With no showrooms or salespeople and end-to-end control over their business, they could keep costs down and sell at lower prices than brick-and-mortar rivals, limiting their catalogue to a select set of products. Like many direct-to-consumer brands, Article stayed off marketplaces such as Amazon so it wouldn’t have to share control of its customer relationships, data or revenue.

Article was one of the earlier movers into online furniture selling; the category lagged others in shifting to digital channels because the products are heavy to ship, and tended to be the kind of big-ticket purchase that shoppers want to check out in person before buying. But category sales continued to grow, led by furniture marketplace Wayfair and Amazon, and accelerated because of the pandemic.

Unlike many digital upstarts, Article was determined to grow by raising little outside money and reaching profitability as soon as possible. By 2015, Article was profitable before interest, taxes, depreciation and amortization (EBITDA), and has stayed that way; it has raised less than US$10-million in outside equity capital to drive its growth, including from Rhino Ventures, a Vancouver early stage investment firm led by Fraser Hall, one of Article’s co-founders.

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