FragranceNet.comDebuts on Wall St.
( Newsday )
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FragranceNet.comDebuts on Wall St.
By James T. Madore. STAFF WRITER
Hoping its scents will lure investors, FragranceNet.com yesterday
debuted on Wall Street by merging with a public company that once paid
cash for life insurance policies of the terminaly ill.
FragranceNet, a small online retailer based in Deer Park, received
approval from NASDAQ to change the ticker symbol to FRGN, in recognition
of last week's buyout of National Capital Management Corp. Yesterday, in
its first trading day as the perfume seller, the shares closed down 56¬
cents to $4.25 on the over-the-counter bulletin board.
Analysts said the stock is thinly traded compared with other
Internet retailers. Approximately 19,400 shares changed hands yesterday,
down from Monday's 122,900 but far above the dead calm seen under
National Capital.
The holding company, with headquarters in Manhattan, has been in a
tailspin for three years. It sold off most of its holdings in real
estate and industrial products, and in December, 1996, stopped buying
life insurance policies from people with AIDS, cancer and other serious
illnesses. The company was delisted from the main NASDAQ market in
August, 1996, after shares fell below $1, where they remained until last
week's sale to FragranceNet.
Venture capitalists with a stake in FragranceNet helped to arrange
the purchase of National Capital, according to Jason S. Apfel, founder
and chief executive of the scents seller. He declined to give details of
the sale pending filing of documents required by the U.S. Securities and
Exchange Commission.
However, Apfel said going public gives FragranceNet access to the
needed capital to expand its Internet beachhead, where orders soared 250
percent last month compared with July, 1998. The company sells more than
1,200 brands of perfume, cologne and toilet waters from Herrera,
America, Fred Hayman, Quelques Fleurs and others. It had modest losses
on last year's sales of under $10 million, he said.
All purchases are gift wrapped, and there are no shipping charges
for U.S.
packages.
Apfel, 26, started the company as TeleScents in 1997 using a few
thousand dollars from the sale of a college magazine he had launched.
Venture capitalists soon provided funds to improve the Web site
(http://www.fragrancenet.com) and the office and warehouse in Deer Park.
"Taking this public step allows us to get into the public eye," he
said, of selling stock. "Now is the time to concentrate on building the
brand." A secondary offering or private placement is planned for later
this year or 2000.
FragranceNet faces competition in the $20 billion perfume market
from scent producers and other retailers such as The Fragrance Counter,
based in Brentwood, and BeautyBuys.com of Syosset.
Gail Bronson, senior analyst at IPO Monitor, said summer isn't an
ideal time to go public. "Stockbrokers are at the seashore and
technology stocks sell off in the summer."
Copyright 1999, Newsday Inc. |
