ASHFORD DEALS ART SITE
Byline: Peter Braunstein
NEW YORK — Embattled luxury pure-play Ashford.com is spinning off its art division, Guild.com, as an independent company, in a bid to reach profit this year.
Ashford acquired the online art dealer just this January in a deal involving 8.7 million shares of Ashford.com, then valued at $4.1 million. (Today, those shares are worth $1.4 million.) After the divestiture, expected to close July 31, Ashford and Guild will remain strategic partners, coordinating marketing activities and sharing revenue from Guild.com art sales on Ashford.com.
“Our new relationship will allow Guild.com to work independently on growing its art business, while taking advantage of traffic from Ashford.com,” said David Gow, Ashford’s chief executive officer. “It will also better position Ashford to reach profitability by the end of the year, by capturing revenue from Guild.com without incurring costs.”
In an interview with WWD Tuesday, Gow further explained the rather abrupt turnaround that led, in six months, from Guild’s acquisition to its spinoff. “Guild is at an [early] point in its development,” said Gow. “They still need funding for growth, while we’re focusing on relationships that can be cash positive in the near future,” Gow added. “In that regard, Ashford is better served through a strategic partnership with Guild.com rather than through ownership.”
Shares of Ashford added a penny Thursday, to close at 16 cents a share. The Houston-based dot-com on July 13 said it is requesting a Nasdaq hearing to review the group’s decision to delist Ashford. If a Nasdaq issue trades below a buck a share for 90 consecutive days, as Ashford’s has, it is subject to delisting from the Nasdaq National Market. Ashford went public at $13 a share in September 1999.
The spinoff of Guild.com is the latest development in Ashford’s ongoing attempt to reach profit in the fourth-quarter. In line with that goal, back in April, Ashford promoted Gow, then its chief financial officer, to ceo, shifting former ceo Kenny Kurtzman to the role of vice chairman.
The three-year-old pure-play also has undertaken several strategic partnerships and marketing initiatives this year, one of them with Continental Airlines that enables One Pass Elite customers to earn frequent flyer points for Ashford purchases. Another, forged earlier this month with eBay, establishes an Ashford Outlet on eBay where watches, jewelry and other discontinued or seasonal items will either be put on the auction block, or offered at fixed discount prices.