CNBC: SQUAWK BOX
INTERVIEW WITH ITURF (TURF) CHAIRMAN AND CEO STEPHEN KAHN
MAY 24, 1999
SUMMARY: iTurf (TURF) Chairman and CEO Stephen Kahn. He explains where the company's revenue comes from.
Mark: iTurf is banking on generation-one because it represents about 56 million people, having over 280 billion dollars in disposable income! Let's face it, my 10-year-old does not have that kind of money, but can wheedle it out of her dad. Most of the company's revenue comes from retail sales, advertising, and licensing fees. iTurf was spun off from parent Delia's in April, at an offering price of $22 dollars a share. The stock has traded as high as $66, but pulled back to close Friday at 25 dollars a share. Joining us now to tell us more about his business is Stephen Kahn, chairman and CEO at iTurf. Good morning, Mr. Kahn. Good to see you.
Good morning. Thanks for having me.
Mark: Let's define iTurf, it's not solely an on-line version of Delia's, correct?
Absolutely not.
Mark: What is it?
Our goal is to become the leading on-line network focused on generation Y leveraging basic community content and commerce. One of reasons we separated is iTurf is a different animal here.
Mark: Okay. How do you -- what can you do that people already out there haven't already done?
Well, we have an enormous set of competitive advantages. The first thing is there's a very synergistic relationship between iTurf and Delia's. First off, we have the opportunity to leverage all the direct marketing assets that have already been built on the Delia's side, including an 11 million-name database to target consumers, including 6 million direct buyers to move into the channel. Secondarily, we already have the brands built at the parent company level, we can move into on-line space as well and leverage. We also have the parent company's assets, which includes a catalog circulation base of nearly 60 million catalogs, the largest publishing group aim at this particular demographic also. And, of course, we'll be advertising our URLs for all of our commerce properties as well as our community in each one of those pages. We also are vertical, which means we have souring and merchandising capability that is unparalleled with thousands of vendors that we're very, very close to as well as capability of producing our own product for this group. And we're also again, as I said, vertical, which means we own our own fulfillment center, a 450,000 square foot facility 27 acres down in Hanover, Pennsylvania, which means we can deliver products to the kids when they over it. So, we are in a terrific position, unparalleled position, to really basically build the dominant franchise for this group on-line as we move into the 21st century. We're experts at building brands and we'll do the same thing on-line. This is the most wired segment of the population. And it is a very, very open and even playing field out there right now. And we think that we have all the advantages.
This is Bob Froelich.
Hey, Bob.
How do you continue the rapid growth in the to this your site. They're up at 35 million now. How do you continue a strategy that will give you that growth going forward that you've had already.
Let me say one thing. First of all, when we actually marketed this deal two months ago, 35 million. We're now averaging well in excess of a million and a half pages views every single day on the network. So, that continues to ramp. As do sales on the network. And I think it's important understand that we have never actually gone outside of the basic parent company's properties in leveraging the traffic here, historically. That's changed, as you'll know, two weeks ago we signed a deal with America Online where we basically bought what we think is the best real estate on-line. We did a deal, we now have four anchor tendencies and new shopping centers there, including three gold tenancies in a content-sharing deal to leverage the girl community into the fabric of America Online. And we think that is going ramp the page views as well as the commerce opportunities, very, very dramatically over the next couple months.
Mark: It sounds like a situation in which I can hear criticism coming depending on how you do this from people who say, you know, you're not making it clear that these children really certainly 10, 11, 12-year-olds, are looking at commercials, are being exploited commercially rather than being on a relatively neutral site like an AOL.
Well, I think it's important actually go into site and take a look. If you get into gurl.com, our on-line community, let me just talk a little bit about that for a second.
Mark: That's gurl.com. There are hundreds of thousands of home pages, about 1,000 getting put up every single day by these kids, hundreds of thousands of e-mail subscribers as community members and basically we don't accept advertising on that site, very, very limited advertising. We're very, very careful.
Mark: What sort of screening is done here to protect children from content.
We have monitors on the chats going through the home pages and in a way we have an enormous advantage in being able to focus specifically on this group and we also have an enormous amount of experience in dealing with this group.
And I think that you'll find that the parent company's brands are very well-respected amongst all of these kids' parents and amongst the kids themselves. And it's obviously, you know, you have to walk a very, very tight line and making sure you're doing the appropriate things that are age appropriate.
Mark: Mr. Kahn thanks a lot. Best of luck to you.
Thank you very much.
Mark: Stephen Kahn, Chairman and CEO at iTurf.
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