Hobby Lobby is a titan of the arts and crafts retail industry, boasting over 900 stores across the United States and $5 billion in annual revenue as of 2020. From humble beginnings as a single store in Oklahoma City in 1972, the company has grown into a nationwide chain and a go-to destination for crafting enthusiasts, DIY decorators, and holiday shoppers.
But despite its massive size and success, Hobby Lobby remains a privately owned company under the control of its founding Green family. Unlike many other large retailers, Hobby Lobby has not gone public by listing shares on a stock exchange for anyone to buy and sell.
So what does it mean for Hobby Lobby to be privately held, and why has the company chosen this path? Let‘s take an in-depth look at Hobby Lobby‘s ownership structure, the pros and cons of remaining private, and what the future could hold for this retail giant.
Hobby Lobby‘s Financials and Footprint
First, let‘s put Hobby Lobby‘s size and success into perspective. Here are some key stats on the company:
- 900+ stores across 46 states
- $5 billion in annual revenue as of 2020 (source: Forbes)
- 43,000 employees
- Ranked #94 on Forbes‘ 2020 list of America‘s Largest Private Companies
- 14.4% estimated revenue growth from 2019 to 2020 (source: privco.com)
- 100+ new stores opened in the past 5 years
For context, the entire US arts and crafts retail industry was worth about $40 billion in 2020, according to IBISWorld. Hobby Lobby alone accounts for over 10% of that total.
The broader US retail industry, meanwhile, did over $4 trillion in sales in 2020 according to the US Census Bureau. So while Hobby Lobby is a dominant force in its niche, it still represents just a small fraction of the overall retail landscape.
Private vs. Public Ownership
As a private company, Hobby Lobby is owned entirely by the Green family. Founder David Green and his wife Barbara own about 44% of the company, while their three children own the rest.
This is in contrast to a public company, which has shares that are openly bought and sold on the stock market. Many of Hobby Lobby‘s peers in the retail industry are publicly traded, including:
- Michaels (MIK): Hobby Lobby‘s closest competitor in arts and crafts, with 1,200+ stores
- Walmart (WMT): The world‘s largest retailer, with 11,500+ stores and $500+ billion in annual revenue
- Amazon (AMZN): The e-commerce and cloud computing giant, with $280+ billion in annual product sales
- Target (TGT): A leading general merchandise retailer, with 1,900 stores and $75+ billion in annual sales
By going public, these companies have been able to raise capital by selling new shares, and their stock can be purchased by anyone. They also have to disclose their financial results every quarter.
Hobby Lobby, on the other hand, can keep most of its financial details private. It doesn‘t have to answer to outside shareholders, giving the Green family more flexibility to run the company as they see fit.
But staying private isn‘t necessarily all positive. Hobby Lobby may have a harder time raising money to fund new store openings or other growth initiatives, since it can‘t sell stock to the public. Its shares also can‘t be used as compensation for employees.
So the decision to stay private involves trade-offs. Let‘s look at some of the key factors that have influenced Hobby Lobby‘s choice.
The Green Family‘s Beliefs and Values
A major reason why Hobby Lobby has stayed private is the Green family‘s devout Christian faith, which permeates the company‘s operations and practices. As David Green explained in his book "Giving It All Away," his religious beliefs are inseparable from how he runs Hobby Lobby:
"From the very beginning, our purpose has been to honor God in all that we do. We believe that it is by God‘s grace and provision that Hobby Lobby has endured, and he has blessed us and our employees. We are guided by our faith in everything, including how we conduct our business."
This faith manifests in several ways at Hobby Lobby. All stores are closed on Sundays to allow employees to attend church. The company plays Christian music in its stores and doesn‘t sell shot glasses or risqué greeting cards. It takes out full-page newspaper ads on Christmas and Easter celebrating the religious meaning of those holidays.
Perhaps most controversially, in 2014 Hobby Lobby successfully sued the federal government over the Affordable Care Act‘s requirement to provide contraceptive coverage to employees. The Supreme Court sided with Hobby Lobby in a landmark decision, ruling that closely held for-profit companies can refuse to cover contraception on religious grounds.
That case thrust Hobby Lobby into the national spotlight and made it a lightning rod in the culture wars. It also underscored the Greens‘ commitment to their principles, even in the face of public backlash and potential financial consequences. A 2014 Pew Research survey found that 53% of Americans disapproved of Hobby Lobby‘s exemption from the contraception mandate.
Navigating such controversy and remaining true to their faith would likely be more difficult if Hobby Lobby had public shareholders to answer to. By staying private, the Greens can ensure that their religious beliefs remain at the core of the company‘s identity.
What Would an IPO Mean for Hobby Lobby?
Given Hobby Lobby‘s size and success, it‘s natural to wonder whether the company might ever go public. An initial public offering, or IPO, would allow Hobby Lobby to sell shares on the stock market for the first time.
The process typically involves hiring an investment bank to underwrite the offering, filing registration statements with the Securities and Exchange Commission (SEC), and holding a "roadshow" to market the stock to potential investors. If successful, an IPO can raise billions of dollars for a company while also providing liquidity for existing shareholders.
Many large private companies have gone this route in recent years, from Airbnb to Uber to Snowflake. In the retail world, grocery chain Albertsons raised $800 million in a June 2020 IPO, and crafts retailer JOANN raised $131 million by going public in March 2021.
For Hobby Lobby, an IPO could provide an influx of cash to open new stores, invest in e-commerce capabilities, or pursue acquisitions. It would also allow the Green family to sell some of their shares if desired, potentially diversifying their wealth. And having a publicly traded stock could help attract top executive talent.
However, going public also comes with significant downsides that the Greens seem keen to avoid. Hobby Lobby would face much stricter financial reporting requirements and would have to disclose key metrics to investors every quarter. Its management team would likely face pressure to prioritize short-term profits and stock price over long-term goals and values. And the Greens‘ voting control over the business would be diluted.
Given these trade-offs, it‘s not surprising that David Green has said he has no plans to take Hobby Lobby public. In his book, he writes:
"Frankly, going public was never something I wanted to do. I always wanted to maintain control of the business, so that we could continue to operate according to our faith and principles. I didn‘t want to have to answer to shareholders or the stock market."
Of course, the Greens‘ reluctance to go public doesn‘t mean an IPO is completely off the table forever. As David and Barbara get older, succession planning will become increasingly important for Hobby Lobby. If none of the Green children want to take over the company, selling or going public could be a way to cash out. An IPO or sale to another company could also make sense if Hobby Lobby‘s growth starts to slow and it needs an injection of outside capital.
But for now, all signs point to Hobby Lobby staying under the Green family‘s tight control. In 2019, David‘s son Steve Green told the National Retail Federation that "maintaining Hobby Lobby as a privately held company is a priority."
The Future of Hobby Lobby
As long as it remains private, the future of Hobby Lobby will largely be determined by the Green family‘s stewardship of the company. And by all accounts, they have ambitious plans for growth.
In 2019, Steve Green said that Hobby Lobby aims to reach 1,500 locations across the US, up from about 900 today. That would likely cement its status as the leading arts and crafts retailer over rival Michaels.
The company is also investing heavily in e-commerce to complement its brick-and-mortar presence. While Hobby Lobby was late to embrace online shopping compared to competitors, it has been rapidly scaling up its digital capabilities. In 2019 the retailer expanded online product offerings by 67% and doubled its digital marketing spend, according to eMarketer.
These moves seem to be paying off, with Hobby Lobby‘s estimated revenue growing 14.4% in 2020 despite the pandemic‘s toll on physical retail. Looking ahead, analysts expect the arts and crafts industry as a whole to keep growing at a steady clip, driven by trends like the rise of DIY culture and personalization. The "maker movement" of crafters and artisans shows no signs of slowing down.
Assuming Hobby Lobby can maintain its leadership position, the future looks bright – even without the visibility and liquidity of being publicly traded. As GlobalData Managing Director Neil Saunders tells it:
"Hobby Lobby has carved out a very successful niche for itself in the arts and crafts space. The company‘s unique merchandise mix, store experience, and devoted customer base give it significant competitive advantages. While an IPO could fuel faster expansion, Hobby Lobby seems content to chart its own course as a private company for the foreseeable future."
Conclusion
The story of Hobby Lobby is one of a family-run business that has managed to become an industry behemoth while staying true to its founders‘ Christian values. The Green family‘s decision to keep the company private has allowed them to maintain control, even as Hobby Lobby has grown to over 900 stores doing $5 billion in annual sales.
By not selling shares to the public, Hobby Lobby has avoided the scrutiny and pressure that comes with being a publicly traded retailer. It can march to the beat of its own drum, closing on Sundays and vocally opposing birth control coverage. An IPO would jeopardize that autonomy.
However, remaining private also means Hobby Lobby has forgone some of the benefits of being public, like easier access to capital and the ability to use stock as compensation. Its financials remain largely shielded from public view.
As long as the Green family remains committed to their beliefs and to running Hobby Lobby, the company is likely to stay private. But as the Greens age and the industry evolves, the calculus could change. An IPO or sale could help fund faster expansion or digital transformation efforts.
For retail industry watchers and investors, Hobby Lobby‘s journey is a case study in the power and potential of private companies. It‘s a reminder that a retailer can reach great heights without turning to the public markets, as long as it has a strong niche, loyal customers, and steadfast leadership. Whether Hobby Lobby can keep thriving in an increasingly competitive and digital world remains to be seen – but its track record so far suggests it would be unwise to bet against this crafty company.
