Zulily (NASDAQ: ZU) is an American flash sales website that caters to mothers looking for unique products like clothing, toys, and home décor for their children. Any item on the website can be on sale anywhere from one day to 72 hours. Customers of the website can also stay informed about a particular product by becoming a member. Zulily announced its third quarter earnings report on Tuesday, November 4th. Although the results beat expectations, the company revealed a weaker-than-expected forecast. Consequently, Zulily shares plunged about 21% in day trading on Wednesday.
In its Q3 report, Zulily reported $0.02 earnings per share on a diluted, Non-GAAP basis, beating the analysts’ consensus estimate of -$0.03 by $0.05. During the same quarter last year, Zulily report $0.00 earnings per share. The company had revenue of $285.80 million for the quarter, compared to the estimate of $285.30 million. Zulily’s revenue was up 71.5% compared to the same quarter last year. On average, analysts predict that Zulily will post $0.20 earnings per share for the current fiscal year.
Zulily CEO Darrell Cavens commented on the company’s decent earnings, saying “This was a strong quarter where we hit several key milestones— the business reached a billion dollars in revenue on a trailing 12 month basis and the majority of our North American orders now come from mobile.” He continued, “We’ve grown adjusted EBITDA and free cash flow while making upgrades to our technology and infrastructure for scale. Our obsession with offering up great products every day at a great value continues to resonate with our customers, and I’m excited about what more we can achieve in the years ahead.”
Despite an impressive earnings report, Zulily’s forecast for its fourth quarter came out below what analysts have predicted. It is being speculated that Zulily’s low fourth quarter outlook was determined as a result of the company wanting to maintain its reputation as a provider of premium-branded products during the holidays, a time when retailers typically host big sales to attract a higher volume of customers looking to buy gifts.
In other Zulily news, CFO Marc D. Stolzman sold 3,200 of his shares in insider trading on Tuesday, October 28th. His shares were sold at an average cost of $37.53, totaling $120,096.00 in value. The deal was admitted in a filing with the SEC.
Shares of Zulily opened at $31.00 on Wednesday, November 5th. The e-commerce website has a 1-year high of $73.50 and a 1-year low of $27.55. The stocks daily moving average is $29.40 and it has a 50-day moving average of $37.15. The market cap for Zulily is $3.52 billion and its P/E ratio is 365.71.
On November 5th, Bank of America analyst Justin Post reiterated a Neutral rating on Zulily and lowered his price target from $46 to $38 following the release of the company’s Q3 report. He pointed out the positive, stating, “Zulily reported in-line rev. at $286mn vs. the Street at $286mn, and EBITDA at $6.4mn beat our $2.1mn aided by improved fulfillment automation gross margin upside.” However, he reasoned his Neutral rating, explaining “Active customer growth decelerated to 72% y/y (from 86% in 2Q) as marketing comps from 3Q13 were difficult and Zulily experienced some e-mail delivery issues, resulting in a modest 3Q marketing pullback.” Post currently has a 65% success rate recommending stocks with a +21.9% average return per recommendation.
Separately on November 5th, Piper Jaffray analyst Neely Tamminga maintained an Overweight rating on Zulily. Tamminga currently has a 28% success rate recommending stocks with a -5.5% average return per recommendation.