ASHFORD SHARPENING FOCUS TO SEEK PROFIT
Byline: Valerie Seckler
NEW YORK — Embattled luxury e-tailer Ashford.com is angling for the high ground in cyberspace.
The three-year-old upscale accessories site is shaving its merchandise offer to focus on the best sellers among its products with the highest margins, plus its productive corporate gifts business. It’s a platform from which the money-losing pure-play believes it stands the best chance of turning a profit by yearend, Ashford’s newly named chief executive officer, David Gow, told WWD Tuesday.
“With our focus shifting from sales growth to profitable revenue, it means concentrating the assortment on the most profitable items,” Gow noted. “The items that are the most popular in traditional retail stores aren’t always the big ones online, and vice-versa. We feel good about our revenue growth being up about 18 percent, year-over-year. When we narrow the offer, we’ll drop items that haven’t made a large-scale contribution to revenue.”
While declining to enumerate items or brands that will be cut or scaled back, Gow did say: “We probably don’t need to carry 80 watch brands.”
It’s been a volatile first quarter for multitudes of dot-coms — an environment that has gotten still shakier for Houston-based Ashford during the past week, after it was warned last Wednesday it could be delisted from the Nasdaq National Market on July 9, and then with the move, announced Monday evening, to revamp its top ranks. Shares of Ashford, which initially came to market at $13 in September 1999, closed at 52 cents, unchanged, in Nasdaq trading Tuesday. As reported in WWD, Kenny Kurtzman has been succeeded as Ashford’s ceo by Gow, 37, who joined the dot-com as chief financial officer in March 1999 from another Houston-based company, Compaq Computer, where he was director of strategic planning. Kurtzman will remain vice chairman.
Another area Ashford will be mining for growth, Gow said, is in strategic partnerships, like one it’s struck with Continental Airlines. “We have a new one coming up on May 1,” Gow offered, but did not name the partner. The alliance with Continental enables the airline’s One Pass Elite customers to earn frequent traveler points for purchases they make at Ashford, a typical Internet deal that fosters customer traffic and ups the likelihood of transacting a sale, although no particular asset is bought or sold by either party.
In disclosing the executive changes, Ashford also provided some unaudited financial figures for its fourth quarter ended March 31. It expects to report net sales of approximately $14 million, up 18 percent from a year ago, and gross margin, before nonrecurring charges, of roughly 18 percent, off 4 percent, due in part to a corporate marketing promotion that netted around 8,700 new customers during the fiscal period.
“We believe the company is entering a new phase, and new leadership will support our transition,” Rob Shaw, Ashford’s chairman and co-founder, said in a company statement. “The board is confident that David Gow can successfully continue Ashford’s move from a company focused primarily on growth, to one focused on cash flow and the development of more profitable categories, such as corporate gifts.
“Kenny Kurtzman has been instrumental [at] Ashford,” Shaw concluded, “and we are pleased that, as vice chairman, he will continue to play a vital role in Ashford’s future.”