GSI Commerce Inc., King of Prussia, Pa., has agreed to sell the assets of Ashford.com, an e-commerce luxury goods provider, to Diamond.com for at least $5 million.
According to statements from GSI and Diamond.com, a Sunrise, Fla.-based diamond and jewelry online retailer, Diamond.com will acquire certain assets of Ashford.com, including Ashford.com’s trademark, URL, other intangible assets, and selected inventory.
“We are excited to add Ashford.com to our group of leading jewelry and watch online properties,” Alan Lipton, Diamond.com president and CEO. “The strong brand heritage and loyal customers of Ashford create an excellent match with our luxury goods infrastructure and overall category expertise. I am pleased that, as part of this transaction, we will gain GSI as a value-added strategic shareholder.”
In addition, over the next several months, GSI, an operator of Web sites for retailers, says it intends to sell Ashford.com’s remaining inventory, close Ashford.com’s Houston facility, and phase out Ashford.com’s corporate gifts business. GSI expects a $7 million to $10 million loss in the fourth quarter as a result of the sale.
“Ashford.com has performed below our expectations and has caused incremental losses for GSI in 2002,” Michael G. Rubin, GSI Commerce Inc. chairman and CEO, said in a statement. “Based on the cost of maintaining a separate jewelry-specific infrastructure in Houston, we reached the conclusion that the business would likely continue to be unprofitable for GSI for the foreseeable future.”
GSI representatives refused to comment further.
GSI (under its former name Global Sports Inc.) purchased Ashford.com for about $14.2 million. The transaction was announced in September 2001. At the time, GSI told JCK that the transaction was one way in which the company was using the Ashford.com Internet platform and brand name to expand into jewelry and luxury goods markets. At the time, GSI specialized in providing e-commerce platforms and fulfillment services for sporting goods retailers and professional sports organizations.
Ashford.com first incorporated in Texas in March 1998 under the name NewWatch Company and began conducting business as Ashford.com in May 1999. In July 1999, the company changed its name to Ashford.com Inc. and re-incorporated in Delaware. Ashford.com became a public company on September 23, 1999. The initial price per share was $13, and the stock was listed on the NASDAQ exchange.
As a public company, Ashford.com began as a luxury and premium goods retailer for consumers and business executives. Due to mounting losses, it tried to reposition itself early this year as an e-commerce destination for corporate and personal gifts and rewards. Meanwhile, by July of this year, the company was delisted from NASDAQ and moved to the OTC bulletin board. At the same time, Ashford.com announced publicly that it was involved in acquisition talks with Global Sports Inc. The deal was announced in September.