The parent company of the home shopping network QVC has bought Zulily, an online retailer of designer brands for moms, babies and kids, for $2.4 billion.
The parent company of the home shopping network QVC has bought Zulily, an online retailer of designer brands for moms, babies and kids, for $2.4 billion.
Liberty Interactive’s QVC Group is paying $18.75 per share for Zulily in a cash and stock deal that reflects a 49 percent premium over Zulily’s closing stock price from the prior week.
The sale comes five years after Zulily was founded by Mark Vadon and Darrell Cavens, former veterans of the online jewelry retailer Blue Nile, and two years after Zulily’s hugely successful IPO that boosted the company’s value to $4 billion.
More recently, however, Zulily’s luster has dulled. Its stock has fallen considerably as sales growth has slowed. After going public at $22 a share in November 2013, its stock jumped to more than $73 within a few months but gradually slid to a low of $9 a share in May.
During the second quarter, net sales crept up 4% to $298 million but important measures of success are down, including the number of active customers, total orders placed and average amount per order. Year-end sales are expected to reach $1.3 billion to $1.4 billion.
QVC officials say acquiring Zulily opens huge opportunities for the “highly complementary’’ retailers. Both employ the same strategy, which is to offer deep discounts for a limited period of time, but cater to different age groups, with QVC attracting older boomers and Zulily drawing millennial moms.
One possibility for growing Zulily would be to sell its products on TV. Currently, there is little overlap between the two companies, which just 6% of QVC shoppers buying on Zulily.
QVC’s programming is distributed to about 340 million homes worldwide.
QVC and Zulily will continue to operate as separate brands but will leverage QVC’s global scale, vendor relationships and video commerce knowledge to benefit Zulily. In turn, Zulily will use its younger customer demographic, eCommerce abilities and personalization features to enhance QVC.
The nearly 30-year-old QVC also plans to draw from its experience with easy-pay platforms and product returns to improve Zulily and could add Zulily vendors to its TV programming.
The sale, which was approved by both boards of directors, is anticipated to close during the fourth quarter of 2015. Following the sale, Zulily will remain headquartered in Seattle, and Darrell Cavens will continue as its president and CEO.
