Zulily: Getting Tempting At $13
Zulily: Reset Expectations On This Growth Story Create Substantial Opportunity
Money Investor • 17 Comments
Money Investor • 17 Comments
Oct. 2, 2015, 5:24 PM
- With Liberty Interactive's (QVCA +1.7%) completed deal for Zulily (NASDAQ:ZU), Brean Capital reiterated its Buy rating based on new competitive strength.
- The firm has a price target of $37 on QVCA; 37.8% upside from today's close of $26.86.
- "We view QVC and Zulily as two companies able to compete against Amazon.com for the long term by offering consumers differentiated merchandise," says the firm's Tom Forte.
- "In our view, applying QVC’s best practices to Zulily should assist in that company’s efforts to reignite customer growth. Lastly, we consider the potential for QVC to attract Zulily’s younger customers as a potential added benefit from the transaction and not a necessity for the deal to be considered a success."
- Zulily will continue to be identified by a separate brand for events both online and on the QVC network.
- Previously: Liberty Interactive completes $2.4B Zulily acquisition (Oct. 01 2015)
Oct. 1, 2015, 3:25 PM
- Liberty Interactive (QVCA +0.5%, LVNTA +1.2%) has acquired all the remaining shares of Zulily (NASDAQ:ZU), wrapping its $2.4B deal.
- The deal was completed through a second-step merger of Liberty's Mocha Merger Sub unit into Zulily. Shares of QVCA and cash have been delivered and Zulily's no longer trading.
- Liberty plans to maintain separate brands for QVC and Zulily, and has pointed toward Zulily-branded sales events both on the air and online.
Sep. 15, 2015, 4:11 PM
- The Justice Dept. and FTC have given an early OK to their antitrust review of Liberty Interactive's (NASDAQ:QVCA) $2.4B deal to buy Zulily (NASDAQ:ZU).
- The move, which means the government saw there was no reason to block the deal or impose conditions, clears the way for a Q4 closing. Both boards approved the deal.
- Liberty has said that it will maintain separate brands for QVC and Zulily, which means Zulily-branded on-air and online sales events. Zulily's senior management, including CEO Darrell Cavens, will continue to run that operation, while Zulily Chairman Mark Vadon gets a seat on the Liberty Interactive board.
- After hours: ZU +0.2%; QVCA -0.5%.
Aug. 17, 2015, 12:44 PM
Aug. 17, 2015, 9:15 AM
Aug. 17, 2015, 8:06 AM
- Liberty Interactive (NASDAQ:LVNTA), (NASDAQ:QVCA) agrees to buy zulily (NASDAQ:ZU) for $18.75 per share - $9.375 in cash and 0.3098 newly issued shares of QVCA. The deal is expected to close in Q4.
- A conference call to discuss the merger is set for 9 ET
- Zulily closed Friday at $12.57.
- Previously: Zulily halted with news pending (Aug. 17)
Aug. 17, 2015, 8:00 AM
Aug. 5, 2015, 5:35 PM
- Three months after cutting its full-year sales and adjusted EBITDA guidance to $1.3B-$1.4B and $55M-$70M, Zulily (NASDAQ:ZU) is reiterating the forecast. Meanwhile, Q3 revenue guidance of $300M-$325M is in-line with a $313.4M consensus; adjusted EBITDA guidance is at $5M-$15M.
- Sales/metrics: Revenue growth slowed to 4% in Q2 from Q1's 29%. Active orders totaled 4.9M, down 2% Q/Q and up 19% Y/Y. Orders placed fell 8% Q/Q and rose 7% Y/Y to 5.8M, and average order value fell to $53.63 from $56.25 in Q1 and $53.85 a year ago. 56% of orders were placed via mobile devices.
- Gross margin rose to 31.1% from 28.4% a year ago. SG&A/marketing spend rose 19% to $87.2M (outpacing revenue growth).
- Shares have risen to $12.54 AH. They're still down 46% YTD.
- Q2 results, PR
Aug. 5, 2015, 4:49 PM
- Zulily (NASDAQ:ZU): Q2 EPS of $0.06 beats by $0.02.
- Revenue of $297.56M (+4.4% Y/Y) beats by $3.57M.
- Shares +7.23%.
Jul. 21, 2015, 9:45 AM
- Stating vendor checks and 3rd-party data "indicate continued softening of demand," Goldman has downgraded Zulily (NASDAQ:ZU) to Neutral ahead of its Aug. 5 Q2 report, albeit while keeping its target at $16.
- Goldman adds it sees a risk of Zulily "lowering the high end of  guidance or potentially a full reset." Its 2015-2017 revenue and adjusted EBITDA estimates have respectively been cut by 6% and 9% on average. The Q2 revenue estimate has been cut by $10M to $291M (below a $295M consensus).
- The online women's/children's apparel vendor is now down 43% YTD, in spite of a May jump seen following news Alibaba had taken a 9.3% stake.
Jun. 24, 2015, 1:20 PM
- Having long maintained a no-returns policy for its apparel/toy flash deals - the stance has helped keep inventory down - Zulily (ZU -1.7%) is now testing a returns program with select U.S. customers. The WSJ states the test covers "some apparel brands and home goods like linens."
- The paper notes Zulily's efforts to begin selling women's apparel and pricier items make returns a bigger issue. Slowing growth might also be a factor: After seeing 72% revenue growth in 2014, Zulily's 2015 growth consensus is at 11.9%. Below-consensus guidance was issued in May.
- Retail consultancy Kurt Salmon states return rates can be as high as 30% for online apparel purchases. Amazon allows free returns on many apparel sales.
Jun. 15, 2015, 11:25 AM
- Beaten-down Zulily (NASDAQ:ZU) is posting big gains on a down day for equities. 2.1M shares have been traded thus far vs. a 3-month daily average of 2.92M.
- The gains follows heavy trading in short-term call options: Over 10K contracts have been traded for calls expiring June 19, with the vast majority sporting strike prices ranging from $14.00-$16.00.
- The women's/children's apparel flash deals provider soared in May thanks to an Alibaba stake disclosure. The WSJ reported at the time Alibaba has no interest in fully acquiring Zulily.
Jun. 12, 2015, 5:37 PM
May 11, 2015, 9:31 AM
- Zulily (NASDAQ:ZU) has soared Alibaba disclosed it has a 9.3% stake in the company.
- Shares are now up 70% from the intraday low set last Wednesday in response to Zulily's Q1 results and Q2/2015 guidance. Short-covering has likely helped: 9M shares (16% of the float) were shorted as of April 15, and many of those shorts undoubtedly hold large paper profits.
May 11, 2015, 9:22 AM
May 9, 2015, 6:11 PM
- After buying 4.8M Zulily (NASDAQ:ZU) Class A shares for $56M (a purchase price of ~$11.67/share), Alibaba (NYSE:BABA) now owns a 9.3% (11.5M-share) stake in the women's/children's apparel flash deals provider. Alibaba's prior stake in Zulily hadn't been disclosed.
- A source tells the WSJ Alibaba, now Zulily's largest outside shareholder, has no interest in fully acquiring Zulily. With the help of its massive IPO proceeds, Alibaba has invested in a long list of U.S. and foreign companies over the last 12 months. Some deals have had clear synergies with the company's Chinese e-commerce/Internet service ops; others are more VC-like in nature.
- Did some investors know in advance? Alibaba's disclosure comes after Zulily's shares swung wildly in the wake of the mixed Q1 results and weak Q2/full-year guidance posted by the company on Tuesday afternoon. After falling 23% on Wednesday to an intraday low of $9.09, Zulily rose 46% to close at $13.30 on Friday. Alibaba's stake is currently worth over $150M.
- Though Alibaba has made several small forays into U.S. e-commerce and is interested in driving more transactions between U.S. and Chinese buyers/sellers, the company has refrained from making a big push into a market where Amazon/eBay loom large. There has been a fair amount of speculation Alibaba could bid for eBay after the company finishes spinning off PayPal in 2H15.
- Yesterday: Alibaba reportedly eyes ~$1.2B investment in India's Micromax