Zulily Q3 Results Top View, Backs 2014 Sales Outlook, But Shares Plunge 16%

(RTTNews) - Shares of Zulily, Inc. (ZU) plunged more than 16 percent in extended trading on Tuesday after the online retailer reported results for the third quarter. However, the company reported a loss for the third quarter that narrowed from last year, reflecting strong sales growth amid improved orders and value per order.

Both adjusted earnings per share and quarterly net sales topped analysts' expectations. The company also provided sales guidance for the fourth quarter, in line with Street view, and reaffirmed sales forecast for the full-year 2014.

Zulily, formerly known as BSI Holdings Inc., was founded in 2009 by Mark Vadon, who owns a 30 percent stake in the company. CEO Darrell Cavens also owns about 20 percent. The company went public in November 2013.

"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," Cavens said in a statement.

The Seattle, Washington-based e-commerce company reported a net loss attributable to common stockholders of $0.80 million or $0.01 per share for the third quarter, narrower than $4.82 million or $0.09 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $2.90 million or $0.02 per share, compared to $0.05 million or breakeven per share in the year-ago quarter.

On average, nine analysts polled by Thomson Reuters expected the company to report a loss of $0.03 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter nearly surged 72 percent to $285.84 million from $166.66 million in the same quarter last year, and topped eleven Wall Street analysts' consensus estimate of $285.28 million by a whisker.

Zulily's active customers were 4.5 million at the end of the quarter, up 72 percent from the same period of the prior year. Total orders placed surged 63 percent year-over-year to 5.9 million for the quarter, with average order value edging up 2 percent to $56.33 from last year.

Looking ahead to the fourth quarter, Zulily forecasts net sales between $391.3 million and $416.3 million. Analysts expect the company to report revenues of $411.95 million for the quarter.

For fiscal 2014, Zulily continues to expect revenues between $1.20 billion to $1.225 billion. Street is currently looking for full-year 2014 annual revenues of $1.22 billion.

"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," Cavens added.

ZU closed Tuesday's regular trading session at $35.96, down $0.92 or 2.49% on a volume of 3.09 million shares. The stock plunged a further $5.77 or 16.05% in after-hours trading.