February 28, 2005, 12:00 AM

In the IPO market, it’s one in, one out

Odimo Inc., which operates Diamond.com and other e-commerce sites, filed an IPO in mid February. At the same time SmartBargains Inc. withdrew its IPO registration.

The IPO market continues to hold allure for online retailers, even if they don’t actually go through with a sale. Odimo Inc., which operates Diamond.com and other e-commerce sites, filed an IPO in mid February with plans to offer 3.1 million shares with a proposed price of $9 a share.

At the same time, SmartBargains Inc. withdrew its IPO registration, which it filed last July, citing the recent changing of the guard at the CEO level.

In January, SmartBargains replaced CEO Carl Rosendorf with board member Jim Held as acting CEO. Rosendorf retains a seat on SmartBargains’ board and will act as an advisor to the company. In its announcement, the company cited “recent management changes, including the appointment of an active chief executive officer.”

“It’s virtually impossible to have a successful IPO unless you have the whole management team filled out,” observes Mary Brett Whitfield, director of the E-Retail Intelligence Program at consultants Retail Forward Inc.

Held joined the SmartBargains board last year. He previously served as CEO of Home Shopping Network, CEO of Adrienne Vittidini Inc. and executive vice president of QVC Inc.

SmartBargains’ revenue rose from $75.8 million in 2003 to $92.2 million in 2004, but the 4-year-old company has yet to be profitable. Losses narrowed from $10.7 million in 2003 to $1.4 million in 2004.

The Odimo transaction is being handled by CIBC World Markets. According to its prospectus, Odimo had net sales of $41.7 million for the year ended Dec. 31, 2003, representing a 51.5% increase from the prior year. For the nine months ended Sept. 30, 2004, Odimo had net sales of $30.7 million, representing a 31.2% increase from the comparable period in the prior year.

However, the company continues to operate in the red. According to the prospectus, Odimo has experienced net losses each year since 1998, including a net loss of $7.1 million for the year ended Dec. 31, 2003, and $10.6 million for the nine months ended Sept. 30, 2004, with an accumulated deficit of $67 million as of Sept. 30, 2004.

With the proceeds of the IPO, Odimo intends to use $15.6 million for general corporate purposes, including the acquisition of inventory, site upgrades and marketing activities.

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