BOO FACES SOME BLEAK PROSPECTS
Byline: Valerie Seckler / With contributions from James Fallon, London / Katherine Weisman, Paris
NEW YORK — Who wants Boo?
That question, raised by a published report that Boo is on the block, could be a tough one to answer, according to Web watchers contacted Wednesday by WWD.
Cyber-watchers speculated that Boo.com might have considerable difficulties finding a buyer for the business that has been plagued by a raft of problems, ranging from a six-month delay of its launch to technological glitches, weak sales and, as a result, trouble building a base of customers for its mix of authentic outdoor brands, classic sport labels, and designer apparel with a techno edge.
Boo apparently was overly ambitious with its launch last November of its site in a dozen countries in multiple languages, a scope which, at that time, gave it one of the highest profiles online — as did its feverish spending on marketing to lure cyber-shoppers with the new brand.
Spokeswomen for Boo.com in London and New York declined to comment on a Wall Street Journal report that the privately held company’s shareholders — including Internaute Bernard Arnault; 21Invest, controlled by the Benetton family; Goldman Sachs Group Inc., and J.P. Morgan & Co. — are getting restless with the myriad problems challenging the six-month-old site, and have called for the company’s sale.
A spokesman for Arnault in Paris could not comment on Arnault’s future investment intentions, if any, regarding Boo. The spokesman for Arnault confirmed that Europ@web, Arnault’s Internet investment vehicle, holds an 8.5 percent stake in Boo, based in London, and noted the stake in Boo was considered strictly a nonstrategic, financial investment.
Calls to 21 Invest in London were not returned.
“A potential suitor for Boo? That’s not an easy question to answer, because I’m not sure there’s anything to buy,” offered Carrie Johnson, associate analyst at Internet consultant Forrester Research. “They generally have not been Net savvy; they’ve offered a terrible shopping experience, and [consumers] haven’t responded to the sophisticated image they’ve conveyed.”
Boo also has experienced an exodus of executives, among them, Patrick Hedelin, one of Boo’s founders, who in February stepped down as executive chairman, assuming a nonexecutive role and relocating to his native Stockholm; former merchandising chief Michael Skidmore, who left the company in March to join shopping portal LuuLuu.com as executive vice president of global markets, and former finance director Dean Hawkins, who departed Boo in April to join another startup, the Dutch Internet service provider Chello, which is preparing an initial public offering.
“You could say the site was ahead of its time, or you could say it simply didn’t work,” Johnson said, but in either case, he added, “The company doesn’t have a clear sense of how to sell online to consumers. Boo and CDNow both spent most of their money building their brands, which is ludicrous without the fundamentals to operate.”
According to one Internet source, “Boo burned through tens of millions of dollars” last year while promoting the brand, procuring merchandise for its five aborted launches and addressing the technical difficulties that curtailed those attempts.
In February, as reported in these columns, rumors circulated that Boo was seeking an infusion of funds and scouting for new investors. But at that time, Tobin Ireland, Boo’s chief retail officer, said, “We have the money we need.” Boo has not revealed the level of startup capital it raised, but estimates range from $125 million to $200 million.
Internet observers pointed out that Web sites are usually acquired for any of a few core assets, including a solid base of customers, a strong infrastructure or an enjoyable shopping experience.
“If Boo.com had been a well-executed site,” Johnson said, “a traditional retailer like Macys.com might have been interested. It took investors a while to realize what a hollow shell [Boo] is.”
An executive at one apparel dot-com agreed.
“I don’t think a traditional retailer will pick them up,” the executive noted. “I don’t know that an established retailer would want the smudged reputation. I think Boo will have a very difficult time, and their asking price will drop radically as time goes on.”
Also portending problems for Boo, in a quest for a suitor, is the recent volatility of high tech stocks, including Internet issues, and the fall from financiers’ favor that business-to-consumer sites have experienced as business-to-business concepts have become this year’s flavor.
“I don’t think anyone is going to buy Boo, because right now the mood is so bleak about troubled dot-coms — and this one is particularly troubled,” projected retail consultant Walter Loeb of Loeb Associates. “They almost had to close down their site in December because it was too difficult to use. They tried to do too much.”
If a party does emerge to woo Boo, Net watchers said, it was more likely to be a retailer looking to expand online than a financial player. Observers dismissed speculation, however, that the suitors might include Marks & Spencer PLC or Kingfisher PLC, pointing out that these retailers already have their own e-commerce sites. Marks & Spencer is focused on turning around its struggling U.K. retail operations and Kingfisher recently announced plans to step up investment in its own e-commerce sites throughout Europe. Most of these deal in home electronics and appliances, however.
As for the possibility of a major athletic brand buying Boo.com, observers said this was doubtful because the brands might fear they would alienate their existing retail partners. A spokesman for Adidas-Salomon AG, one of the brands mentioned, downplayed the reports and pointed to the company’s announcement Wednesday of its own Internet tie-ups (see story on page 8).
Nonetheless, Forrester’s Johnson said there was one asset that could be salable: Boo’s sourcing relationships with brands ranging from Helly Hansen, The North Face and Fred Perry to Triple Five Soul, DKNY and Daryl K 189.
“Boo’s product sourcing could be of value to, say, a Fogdog if they wanted to get into higher-end brands, or hard-to-find items, like Fred Perry in the U.S.,” Johnson said.
Meanwhile, Boo has attempted to push ahead. Last week in Manhattan, it held a sneak preview of its fall merchandise — slated to go online beginning in August — and, ironically, it is planning a six-month birthday party, also to be held here, tonight.