Zulily Tumbles 6% On Weak Q3 Outlook; Q2 Results Top View, Boosts 2014 Outlook

(RTTNews) - Shares of Zulily, Inc. (ZU) tumbled nearly six percent in extended trading on Wednesday after the online retailer forecast a loss for the third quarter.

However, the company reported a profit for the second quarter, 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 raised sakes 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.

"We saw a significant increase in active customers and orders year over year, leading to a strong second quarter for the company. These customers are increasingly shopping with us across platforms, with almost half of our order volume now coming from mobile devices," Cavens said in a statement.

Seattle, Washington-based Zulily reported net income of $7.76 million or $0.06 per share for the second quarter, compared to breakeven results in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $11.41 million or $0.09 per share, compared to $5.70 million or $0.05 per share in the year-ago quarter.

On average, six analysts polled by Thomson Reuters expected the company to report earnings of $0.04 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter nearly doubled to $285.01 million from $145.01 million in the same quarter last year, and topped seven Wall Street analysts' consensus estimate of $272.04 million.

Zulily's active customers were 4.1 million at the end of the quarter, up 86 percent from the same period of the prior year. Total orders placed surged 92 percent year-over-year to 5.4 million for the quarter, with average order value edging up 1 percent to $53.85 from last year.

Looking ahead to the third quarter, Zulily forecasts a net loss in a range of loss of $12.5 million to $7.5 million, on projected net sales between $275.0 million and $287.5 million. Analysts expect the company to report earnings of $0.01 per share for the quarter on revenues of $283.29 million.

For fiscal 2014, Zulily raised its revenue forecast to between $1.20 billion to $1.225 billion from the prior range of $1.15 billion to $1.20 billion. Street is currently looking for full-year 2014 annual revenues of $1.20 billion.

"Mobile is a huge opportunity for us and we'll continue our innovation in this area. We continue to focus on offering more brands and great product diversity that brings our customers back to us again and again," Cavens added.

ZU closed Wednesday's regular trading session at $39.37, up $1.52 or 4.02% on a volume of 4.33 million shares. However, the stock plunged $2.32 or 5.89% in after-hours trading.