Chinese online-commerce giant Alibaba Group Holding Ltd.’s stake in U.S. Web retailer Zulily Inc. has reached 9.2 percent, as the former snapped up shares of the latter at rock-bottom prices last week. Alibaba finished a three-day buying binge Friday, and it now holds 11.5 million shares of Zulily, a site that hosts so-called flash sales of clothing primarily for women and children, according to a U.S. Securities and Exchange Commission filing posted late Friday.
After spiking to $73.50 in February 2014, Zulily’s share price has fallen sharply, and it closed at $13.30 Friday. Shares hit a record low of $9.09 Wednesday, the first day of Alibaba’s acquisitions, as brokerages slashed price targets for the company because of a disappointing first-quarter report.
Before the week’s buys, Alibaba held a bit fewer than 7 million Zulily shares, the SEC filing showed.
The Wall Street Journal, which first reported the investments, quoted a person familiar with the matter as saying Alibaba was not looking to acquire Zulily outright. Meanwhile, Zulily CEO Darrell Cavens said his company had a lot of respect for Alibaba and welcomed it as a shareholder.
While Zulily goes head-to-head with other flash-sale sites such as Rue La La, it has said it expects to compete increasingly with Alibaba and the other major shopping platform, Amazon.com.
The Journal said the drop of more than 40 percent in Zulily’s share price this year was largely due to reports of sharply decelerating sales growth and difficulty holding on to customers.
(Reporting by Lisa Lambert; Editing by Peter Cooney)