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IPO Washout CafePress Holds Allure as a Target

Stocks in this article: PRSS AMZN WMT EBAY SFLY

NEW YORK (The Deal) -- Customization e-commerce retailer CafePress  (PRSS) could be an enticing acquisition target to the likes of Inc.  (AMZN) and Wal-Mart Stores  (WMT) if it launches a sale process, despite failing to impress investors since raising $86 million in its initial public offering almost two years ago, according to sources.

Raymond James & Associates' Bob Lockwood and Jason Harkness are providing financial advice to CafePress, while Pillsbury Winthrop Shaw Pittman is providing outside counsel, CafePress CEO Bob Marino said in a Feb. 14 email.

Meanwhile, in a Feb. 14 statement, CafePress announced the departure of Monica Johnson as chief financial officer. Beginning in the second quarter, CafePress chief information officer, Garrett Jackson, will be the interim CFO.

One CafePress shareholder who described the company's post-IPO tenure as a "big disappointment" said he thinks a sale could turn things around, noting that the market for online retailers that are focused on product customization still has a lot of room to grow.

"This management team has failed to perform since the first day of going public," the shareholder said by phone.

This investor, who asked to go unnamed, expected Johnson to depart almost a year ago after CafePress missed its financial expectations in its first two quarters as a public company.

"Right now, the company is trading at a market value that reflects a view of ineptitude," the shareholder said.

Since its $19 per share debut in March 2012 on the Nasdaq, CafePress shares have plunged more than 65%, finishing at $6.64 on Feb. 13, the day before a strategic review was announced. The stock, which is listed under the symbol PRSS, has since slumped another 20%, to a $5.29 finish on Tuesday. CafePress' all-time low was $4.96 on Nov. 8, 2012.

The 25-year-old company, which recently moved its headquarters to Louisville, Ky., from San Mateo, Calif., lets shoppers customize everything from hoodies and posters to shot glasses and yoga mats, and also allows users to create online shops to sell their own products.

Despite its lackluster share performance, sources still think CafePress would draw quite a bit of interest if it pursues a sale, given that it has still managed to increase revenue and already has a good operational system in place.

CafePress generated revenue of $245.9 million for the 12 months ended Dec. 31, up from $217.8 million a year earlier. But it lost $13.5 million last year, as compared with a $3.1 million profit in 2012.

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