Flash-sale web retailer zulily Inc. grew sales rapidly in 2014 as a whole, but the increase in fourth-quarter sales wasn’t nearly as robust.
Zulily, No. 55 in the Internet Retailer 2014 Top 500 Guide reported Wednesday 2014 web sales 72.5% higher than 2013 sales, a growth rate nearly five times faster than that of U.S. e-commerce sales, which Internet Retailer estimates grew about 16% in 2014 to $305 billion.
At the same time the web-only retailer posted a big jump in sales, zulily, which went public in November 2013, also reported a profit in the fourth quarter and for the full year. “Our goal is to build zulily into one of the most innovative and profitable consumer retail Internet businesses,” CEO Darrell Cavens told Wall Street analysts on the company’s year-end earnings call according to a transcript from SeekingAlpha.com. “That means doing things differently and innovating in a way that constantly surprises and delights our passionate customer list. “
But the search is on for a new chief financial officer to replace Marc Stolzman, who is leaving next month. He will be replaced on an interim basis by vice president of accounting Tad Larsen. “We are announcing that Marc Stolzman will no longer serve as chief financial officer of the company but will remain with the company through early March to assist with the transition,” Cavens told analysts. “We have kicked off an executive search process and expect to announce a successor in the near future.”
For the year:
- Sales increased 72.5% to $1.20 billion from $695.7 million.
- Net income was $14.9 million, a 15.5% increase from $12.9 million in 2013.
- Spending on marketing increased 68.7% to $100.7 million from $59.7 million and represented 8.4% of total sales.
- Selling, general and administrative expenses grew I72.3% to $208 million from $120.7 million and represented 16.7% of total sales.
“We ended the year with 4.9 million active customers, up from 3.2 million customers a year ago,” Cavens told analysts. “We’ve significantly expanded our market opportunity to move beyond mom as a customer to include all women, and saw our brand become more relevant for our customer shopping for herself, her family and her home.”
For the fourth quarter zulily reported:
- Sales increased 52.3% to $391.3 million from $257.0 million.
- Net income was $10.9 million, a decrease of 14.8% from $12.8 million in Q4 2013.
- Spending on marketing increased 67.6% to $28.5 million from $17 million and represented 7.3% of total sales.
- Selling, general and administrative expenses grew 58.2% to $60.9 million from $38.5 million and represented 15.6% of total sales.
- Average ticket was $59.09 versus $48.60.
- 51% of all North American orders were placed via a mobile device, compared with 45% in the prior year.
- Net sales for the first quarter are expected to range from $300 million to $320 million and from $1.50 billion to $1.65 billion for the full year.
The company continues to expand internationally and add fulfillment capability. In 2014, we also launched dedicated sites with localized shopping experiences for Australia and Ireland,” Cavens told analysts. “We made significant upgrades to our fulfillment network including a major overhaul of our proprietary warehouse management, system automation of our Ohio fulfillment center and a transition into a new facility in Nevada, that’s twice the size of our old location.”
Zulily also will add a new distribution center for the East Coast but didn’t break out many specifics. “We announced plans for our third fulfillment center location in Pennsylvania,” Cavens told analysts. “With these investments we believe we will have enough capacity to grow into 2016.”
While zuliy posted big growth numbers in 2014, some Wall Street analysts are expecting much more moderate growth in 2015. “2015 guidance implies a dramatic revenue growth deceleration to 30% down from 72% in 2014, and well below our prior 48% estimate,” Canaccord Genuity Inc. research analyst Michael Graham wrote in a brief.