Why Zulily, Inc. Stock Skyrocketed 34.4% in August

By Steve SymingtonFool.com

What:Shares ofZulilyjumped 34.4% in August,according toS&P Capital IQdata, driven by the online retailer's better-than-expected second-quarter results. Even so, following a difficult start to the year, Zulily stock is still down more than 23% so far in 2015, trailing the more modest 3.9% decline from the S&P 500 during the same period:

ZU data by YCharts.

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So what:The massive drops in February and Maycame as Zulily fell short of analysts' respective expectations with its fiscal fourth-quarter 2014 and first-quarter 2015 reports. With the latter, however, Zulily hinted at strength to come given the launch of its redesigned website, which featured a more responsive design aimed at enhancing a shopper's experience across all platforms.

What's more, Zulily CEO Darrel Cavens noted that, while customers acquired from product- and event-specific marketing drove higher initial purchases, they also resulted in lower lifetime values and higher customer churn. As a result, Zulily decided to prudently slow marketing, and retool its processes with long-term returns on investment in mind.

Now what:That long-term focus began to yield fruit in Zulily's most-recent quarter, where it handily beat Wall Street's expectationson both revenue (up 4% year over year, to $297.6 million), and adjusted net income (down by a third, to $0.06 per share). More specifically, according to Cavens, that outperformance can be chalked up to a combination of cost management, progress in marketing strategy, and the result of prior investments aimed at improving Zulily's supply chain. Zulily also reiterated its full-year guidance -- which was already in line with analysts' expectations -- calling for 2015 revenue of $1.3 billion to $1.4 billion, and adjusted EBITDA between $55 million and $70 million.

For now, I'm content continuing to watch Zulily's progress from the sidelines. But given its most recent signs of life, I'm also not surprised investors are willing to give the promising retailer a second chance.

The article Why Zulily, Inc. Stock Skyrocketed 34.4% in August originally appeared on Fool.com.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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