Zulily IPO: Zulily’s Biggest Sale Yet!

Zulily's business looks healthy, and several other factors are shining positive rays on the offering

   

Zulily, which operates a flash sales site, has filed for an initial public offering, and considering the recent bull move in consumer Internet stocks, the Zulily IPO looks poised for a strong performance.

For the most part, Zulily focuses on selling apparel, shoes, toys and décor for moms, babies and kids; some of the brands include Corky’s Kids, Crocs (CROX), Disney (DIS), Dr. Seuss, Lego and Skechers (SKX). Zulily features sales every day — lasting about 72 hours on average — and the company advertises discounts of as much as 90% off retail.

Zulily’s founders, Darrell Cavens and Mark Vadon, certainly know the e-commerce market — they helped to build Blue Nile (NILE), a pioneer of online jewelry sales.

Their new retail business has achieved large scale, with sales hitting $331.2 million in 2012 and the first six months of 2013, up 132.4% from the 2011-July 1, 2012 period. During this time, Zulily also managed to shrink its net loss from $6.2 million to $2.4 million. Mobile has helped drive results; about 42% of U.S. orders were placed from mobile devices in the second quarter.

While it’s true that the flash-sales market was tainted by the disastrous Groupon (GRPN) IPO in late 2011, its fortunes have turned, as have GRPN’s, with the stock up 125% year-to-date. (Though in fairness, much of its success has come on the back of sales of physical goods).

Bullishness in the industry is further illustrated by a warm reception in the IPO market. Just look at RetailMeNot (SALE), which operates a virtual coupon marketplace. Since coming public in July, SALE shares are up about 65%.

And Zulily could even expect a nice boost thanks to the IPO excitement being stirred up thanks to the Twitter offering.

Still, the Zulily IPO should see success on its own merits as a solid operator. For example, one of the company’s VCs, Jeff Jordan (a partner at Andreessen Horowitz), had this to say when his firm invested in the company:

“Zulily is one of the fastest growing businesses we have ever encountered. What is even more impressive is how they have done this: The company spent minimal capital to achieve this result …

“We are also impressed with Zulily’s execution. They are as data-driven as any company we’ve encountered, and use it to great advantage in both marketing and merchandising. They leverage technology adroitly to optimize the business. And they’ve rapidly developed operational capabilities that have enabled their hyper-growth.”

Lead underwriters for the Zulily IPO include Goldman Sachs (GS), Bank of America (BAC) and Citigroup (C). The company plans to list on the Nasdaq under the symbol “ZU.”

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/zulily-ipo-filing-zu/.

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