BabyUniverse buys e-tailer PoshTots
By Jane Kitchen -- Kids Today, 2/1/2006
Fort Lauderdale— Online retailer BabyUniverse has acquired Richmond, Va.-based luxury online retailer PoshTots in a $12 million-plus deal, which includes cash, stock warrants and stock.
Consideration paid for PoshTots includes $6 million in cash, $6 million in a one-year note, 237,248 shares of BabyUniverse common stock and 110,000 warrants to purchase BabyUniverse common stock at a price of $8.10 per share (as of January 23, BabyUniverse stock was valued at $8.90 per share).
PoshTots' entire team is staying on, including founders Karen Booth Adams and Andrea Edmunds.
"We feel privileged to have attracted the PoshTots team into the BabyUniverse family," said John Textor, chairman and CEO of BabyUniverse. "They have developed a highly differentiated business model that has resulted in a remarkably strong luxury brand, a high-margin e-commerce business, an attractive content strategy and an efficiently balanced online and offline marketing model."
The company reports that PoshTots generated approximately $7 million of gross sales (unaudited) in 2005, an increase of 43% over its $4.9 million in gross sales for 2004. Textor said in a conference call he expects continued growth for both BabyUniverse and PoshTots based on migration of retail to the Web.
"The vast majority of wealthy women who are expecting now or are new mothers have heard of PoshTots," said Textor. "It is a brand. That's the biggest part of this acquisition."
PoshTots will continue to pursue its established business lines, in addition to a development-stage "Branded Content" opportunity designed to capitalize on the company's affluent customer base.
In late 2005, PoshTots distributed its first sponsored content publication to its customers, and the company plans to launch an advertisement-supported e-zine to its customer base beginning this month.
"Content is one of those ways to differentiate yourself, and to inspire the customer to have a relationship," said Textor.
Textor said there are areas for synergy between BabyUniverse and PoshTots, where BabyUniverse products might be brought onto the PoshTots Web site. This could include things like high-end strollers and carseats — categories that PoshTots has so far only carried in a limited fashion.
And Textor said there are opportunities for PoshTots to stock merchandise at BabyUniverse's new 24,000-square-foot warehouse in Las Vegas, set to open this month.
Textor also mentioned the possibility of using PoshTots' highly desirable mailing list to partner with other companies that want to reach that high-end consumer. "These are the wealthy women that everybody wants to market to," he said.
PoshTots has recently made the leap out of the baby arena by expanding its presence to include PoshLiving, and Textor said he plans to continue that trend of targeting the same affluent women who shop at PoshTots who may be interested in home décor in general.
"It's about celebrating an affluent family lifestyle," said Textor.
BabyUniverse went public in 2005; shortly thereafter, it acquired competitor Huta Duna, owner of the Web site DreamTimeBaby.com, in a $6.4-million-plus deal.
