Byline: Valerie Seckler

NEW YORK — There may yet be profits for style merchants in dot-comville, if’s second-quarter results are any indication.
Positive signals in those financials, plus other favorable signs, have surfaced above the red ink flowing on Ashford
.com’s bottom line, as its net loss widened to $39.1 million in the quarter, from a year-ago loss of $3.5 million.
The upscale e-tailer on Thursday said it has:
Slashed its cash losses for the quarter ended June 30 by 23 percent, to $10.6 million, or 23 cents a share, from 30 cents a share a year earlier.
More than tripled its second quarter sales, which totaled $13.1 million, against $3.6 million, while lifting its customer count sixfold, to 112,114 accounts.
Obtained a $23 million credit line — and vote of confidence — from Congress Financial Corp., which it will not have to repay during the revolving arrangement’s three-year term.
Renegotiated its alliance with Yahoo for terms expected to halve its customer acquisition costs on that portal.
“We are pleased with our financial progress and our new debt-financing commitment, which we believe will improve our liquidity position,” said Kenny Kurtzman, chief executive officer of, in a conference call with financial analysts Thursday.
“Our results demonstrate Ashford is on a steady march to profitability,” Kurtzman continued. “The entire company is focused on executing a plan that is aimed at attaining profitability in the fourth quarter of 2001. We are committed,” he added, “to driving revenue, cutting cash losses and reducing customer acquisition costs until we meet this goal.”’s operating loss in the second quarter came to $39.8 million, versus a loss of $3.2 million a year ago. However, excluding charges for depreciation and amortization, the operating loss for the most recently completed quarter totaled just $11.3 million, according to David Gow,’s chief financial officer.
Absent charges for depreciation and amortization, Ashford
.com said its second-quarter net loss was $10.5 million, compared with a loss of $13.3 million in the first quarter and a loss of $2.5 million in the second quarter of 1999.
As of June 30, had 45.1 million common shares outstanding, up from 11.6 million shares in the prior-year period.
On Thursday, the issue gave up 9/16 to close at 3 1/2 in over-the-counter trading as the Nasdaq plunged 145 points, or 3.65 percent, to 3,842.
“We are making significant progress on our five-step plan to achieve profits,” Kurtzman said. Those steps are building customer loyalty, increasing marketing efficiencies, boosting sales of higher-margin merchandise, managing working capital more efficiently and controlling expenses.
In an interview following the conference call Thursday, Kurtzman told WWD that’s second-quarter marketing costs came to 60 percent of sales, or $7.8 million, down from 88 percent of sales in the first quarter.
In addition, the ceo noted 26 percent of’s second-quarter sales stemmed from repeat customers, up from 22 percent in the previous quarter. “This suggests our efforts to improve the site are working,” Kurtzman said.
Repeat customers are particularly valuable to e-tailers striving for profits because they make higher sales transactions, on average, than new customers.
At, Kurtzman said, repeat customers are ringing up purchases of $800 per visit, on average, compared with the Web site’s overall average transaction of $400.
Meanwhile, lowered its customer acquisition costs by 15 percent during the second quarter from levels in the prior-year period, he added.
Assessing’s effort to sell more higher-margin goods, Kurtzman said, “We were especially pleased with the performance of sunglasses, spurred by the style worn by Tom Cruise in ‘Mission Impossible.’ Demand for fine jewelry and diamonds also was strong.”
In fact, the burgeoning diamond and jewelry sales — and inventories — played a key role in obtaining the revolver from Congress Financial Corp., a unit of First Union Bank, the nation’s sixth-largest bank, Kurtzman said.
To keep its momentum going, said it has:
Created the Ashford Collection, comprising more than 350 pieces of private label jewelry.
Expanded its bridal and rings department, which now features a “Build Your Own Ring” tool and an enhanced search capability.
Opened a fragrance boutique with 1,000 items from 250 brands, integrating labels from, which acquired this year, with editorial content.
Fashioned a fulfillment deal with FedEx, facilitating next-day delivery for most items carried on the site.
Currently, Houston-based is delivering 97 percent of its goods that are shipped by 5 p.m. on the next day, according to Kurtzman. ended the second quarter with $38 million in cash on its balance sheet, a figure its ceo expects to keep the company from relying too heavily on the $25 million revolver while it dips into the new fund to stay liquid.
The dot-com is projecting its sales will reach roughly $13 million in the third quarter and rise to around $42 million for the fourth fiscal period. Ashford
.com’s full-year sales for 1999 amounted to $39 million.
“With these volumes and continued cost reductions,” said Kurtzman, “we expect we will reach profitability by Christmas 2001.”

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