The value of Zulily took a nose-dive on Thursday on a lousy earnings report that sent investors heading to the exits.
The flash sale Web site is apparently having difficulty keeping new customers, leading the company known for rapid growth to post a weak sales forecast that sent shares plummeting 27 percent to $14.52 — their lowest level ever.
The Internet retailer unexpectedly replaced its chief financial officer, Marc Stolzman, according to the Wall Street Journal, and said it was struggling with higher costs related to its distribution centers that depressed fourth quarter profits.
In 2013, Zulily sold shares to the public at an offer price of $22 a share.
The Seattle-based company has used limited-time sales of heavily discounted merchandise to clock rocketing sales gains each year since its founding in 2010.
Zulily initially focused on emerging brands with limited distribution, but a push to offer bigger, more established labels has resulted in higher rates of churn among its customers, raising questions about the company's ability to sustain its pace of growth.
"They've had high satisfaction rates among their customers, but just how many more customers like that are there?" said Mark Mahaney, an analyst with RBC Capital Markets.
At the end of last year, Zulily counted 4.9 million customers who had made at least one purchase in 2014, up from 3.2 million in 2013. But the cost of acquiring new customers rose 24 percent from 2013.
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