Odimo Files IPO

July 19, 2004

Odimo Files IPO

Online diamond and jewelry retailer Odimo of Sunrise, FL, filed an initial public offering July 16 to sell an estimated $57.5 million in stock, according to the Miami Herald. The filing comes two months after Blue Nile – another diamond and jewelry retailer on the Internet – and investors sold $76.7 million of shares in an IPO. Blue Nile's shares are up 65% since debuting at $20.50 on May 20.

David Menlow, president of IPOfinancial.com, a research firm that studies public offerings, doesn't expect Odimo's IPO will be greeted with the same fanfare. Odimo operates Web sites Diamond.com, Ashford.com and WorldofWatches.com., selling brand-name luxury goods at as much as 60% off retail.

"At this point, [Blue Nile's] a very high-water mark for Internet-jewelry operations," Menlow said. "[Odimo] clearly does not have the financial footprint that Blue Nile does." While Blue Nile is profitable – it generated nearly $27 million in net income on $129 million in sales last year – Odimo operates in the red. Since its inception in 1998, Odimo has lost more than $62 million, including a $14.1 million loss on $10.4 million in sales in the first quarter of this year. Odimo posted a $7.1 million loss on $41.7 million in sales last year. That compares with a loss of $6.2 million on sales of $27.5 million in 2002. "This is not the time to cast away reality for the '90s Internet mentality, which was all about perception,'' Menlow said. "Odimo ... has to come in with concrete results that are profitable and [it has] to show the ability to maintain growth on the profit side."

Odimo plans to use proceeds from the offering to pay off debt, acquire inventory, and upgrade and promote its Web sites. It didn't disclose the number or estimated price of the shares to be offered. Some current shareholders also will sell an undisclosed amount. The actual offering price may change, Odimo disclosed. The valuation on the offering was estimated solely to calculate the registration fee.

Alan Lipton, Odimo's chief executive and president, said the company is in a quiet period and declined to comment. Lipton was a founder and president of Jan Bell Marketing, a Sunrise, FL, company that sold jewelry to wholesale clubs before shifting to retail with its $100 million acquisition of Mayor's Jewelers in 1998. He acquired Odimo together with Beny Steimetz and Philippe Laub in November 1999. ''All I'm doing here is the exact same thing we did at Jan Bell: basically sourcing on a worldwide basis,'' Lipton said in November. Odimo purchases watches and luxury goods from sources outside the control of the brand manufacturers, commonly referred to as the "gray market."

The U.S. Department of Commerce estimated jewelry and watch market sales at $54 billion in 2003. Forrester Research estimated online diamond and jewelry sales at $2 billion during the same period. It predicts online diamond and jewelry sales will rise 25% a year to $6 billion by 2008.

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