ITURF.COM REBOOT TO ADD E-TAILING

Byline: Vicki M. Young

NEW YORK — Online teen network iTurf Inc. will bring e-commerce to its flagship iTurf.com site for the first time when it’s relaunched next Monday, but major apparel players probably won’t be part of the merchandise mix until the fourth quarter’s holiday season.
The new date follows delays in the site’s relaunch, originally slated for January, and then February.
ITurf executives disclosed in an interview that the delays stemmed from a need to beef up the site’s staffing to ensure “high quality content.”
ITurf, based here, comprises a network of 10 Web sites — including one located at iTurf.com — with links to the individual sites. Those sites, such as Delias.com and Gurl.com, can be accessed either through iTurf or directly without the network link.
So far the firm’s major source of e-commerce revenue is Delias.com, which is operated by iTurf’s parent company, Delia’s Inc. Delia’s sells branded and private label apparel, accessories and footwear targeting juniors.
The infrastructure of iTurf.com is built on proprietary software, designed to soup up the site’s fulfillment capabilities. That infrastructure, said Stephen Kahn, president and chief executive officer of iTurf, will also enable the company to serve as fulfillment provider for third-party vendors.
That’s not all that’s cooking at iTurf, which went public last April.
Kahn unveiled some of iTurf’s plans on its fourth-quarter-earnings conference call last month, noting that the company may ink partnerships with some vendors in time for back-to-school. However, the new shopping section isn’t likely to include a full complement of merchandise from other fashion vendors until the holiday selling season.
According to Dennis Goldstein, iTurf’s chief financial officer, sales of more than $10 million were transacted on the network during the fourth quarter of 1999. Ad revenue, he continued, has been growing steadily for the company, whose advertisers include Maybelline, J.C. Penney’s Arizona Jeans, Pantene and iBeauty.com.
Also, through a recently signed deal with Unilever, Pond’s Clear Solutions will be marketed on the iTurf network, with ad promotions planned to go live at Gurl.com, among other iTurf sites. Gurl.com is set to be relaunched in the third quarter.
Oliver Sharp, chief technology officer, noted that it’s been “difficult to cut [ad] deals [since iTurf.com is] not yet relaunched.”
For his part, Kahn contended that many “six-figure” marketing arrangements are currently being negotiated. These deals typically run from one to six months, and range from more basic banner ads to sampling programs.
Given its present operating structure, and anticipated advertising partnerships this year, Kahn said that iTurf expects to achieve “profitability on a cash flow basis in the second half of 2001.”
ITurf’s fourth-quarter loss, reported last month, was smaller than Wall Street expected, coming to $6 million, or a loss of 26 cents a share, including amortization of intangible assets. First Call analysts estimated iTurf would log a loss of 33 cents a share for that quarter, ended Jan 29.
Without the amortization charge, iTurf’s loss in the recent period would have tallied $5 million.
The Internet player’s revenue ran up nearly sevenfold during the fourth quarter, amounting to $14 million, versus $2.1 million in the comparable 1998 period. However, the firm’s $12.4 million in selling, general and administrative costs in the period wiped out iTurf’s $6.5 million in gross profits. ITurf’s 1998 fourth-quarter operating costs were a scant $419,000.
Despite beating Wall Street’s fourth- quarter consensus by 7 cents a share, iTurf’s stock lost 1 1/8 to close at 10 1/8 in Nasdaq trading on March 28, the day the results were disclosed. Since then, shares of the firm have fallen further, following the recent volatility in high tech issues, including Internet stocks. Shares of iTurf slid 15/32 to end Thursday’s session at 4 11/16.
ITurf, initially priced at $22 for its public offering, opened trading last April at $60.
For the full year, iTurf reported a loss of $14.3 million, against net income of $425,000 in 1998. Gross profit for the year totaled $11.7 million.
Revenue for the year grew to $24.8 million, up from $4 million in 1998. Operating expenses in 1999 were $27.5 million, versus $1.4 million.
Traffic on the iTurf network, which claims six million registered users, exceeded 170 million page views in February, up from 38 million a year earlier. Unique visitors to iTurf’s sites in February 2000 totaled 3.1 million, according to Media Metrix, while Nielsen NetRatings reported a slightly lower 2.7 million figure.
At the same time, the iTurf.com destination itself was visited by 221,000 females 12 to 24 years old, in February (see chart), and by 117,000 women, ages 25 to 44, according to Media Metrix.
Much of the company’s traffic increase stems from its acquisitions of OnTap.com and TheSpark.com, which have boosted the network’s content and sense of community. OnTap is aimed at college students, while TheSpark targets young adults.
Both sites were acquired to extend iTurf’s reach beyond its core 10-to-24-year-old consumers, members of Generation Y. Among the iTurf sites favored by teenage girls are Gurl.com and Delias.com. The network also includes Discountdomain.com, an outlet site that enables its paid membership to shop for apparel and “roomware” at steep discounts.
ITurf, which is hoping to capture more Gen Y eyeballs, has also been adding strategic partners, and buttressing the network’s communications tools.
Earlier this month, iTurf announced it would team up with Insound, a vertical portal of independent, or “indie” culture, to provide proprietary music content and retail recorded music at the revamped iTurf site. Under the deal, Insound and iTurf will create a cobranded site on the iTurf network, with the two partners sharing its revenue.
Earlier this year, the company secured deals for several components of the site’s community and communications infrastructure, including an e-mail application from Critical Path and a voice-chat application provided by Firetalk Communications.

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