| To: Glenn Petersen who wrote (50) | 4/3/2004 9:33:19 PM | | From: Tom Caruthers | | | | Hi Glenn,
Although the stock has suffered a significant correction, I am encouraged that the company has the ability to make money on many fronts, including local advertising (which represents a huge upside) as well as increasing merchandising revenue.
These could substantially impact the bottom line and also the share price. Hope things are well.
Tom |
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| To: Tom Caruthers who wrote (52) | 4/7/2004 8:32:44 PM | | From: Glenn Petersen | | | | Tom,
Here is another source of potential revenue for KNOT that I had not previously thought about. There are some nice quotes from The Knot here.
The Gay-Marriage Windfall: $16.8 Billion
Aude Lagorce, 04.05.04, 6:00 AM ET
forbes.com
The national debate over gay marriage is still heating up, with no resolution in sight. But one thing is abundantly clear: Legalizing same-sex marriages would mean a windfall for the wedding industry. We estimate that if the laws were changed, gay couples currently living together would collectively spend $16.8 billion to get hitched.
Of course, they wouldn't all get married right away, so it might be several years before the industry reaped the entire windfall. But it seems reasonable to presume that if same-sex marriage were to be legalized, a large percentage of gay couples immediately would begin making plans to march down the aisle together. The industry would catch the bouquet in the form of a short-term gain of prodigious proportions.
From caterers to jewelers to travel agents, the $70 billion-per-year U.S. wedding industry embraces a wide array of sectors. If gay couples could say "I do," and assuming they spend as much on the occasion as their heterosexual counterparts, then such companies as Tiffany (nyse: TIF - news - people ), Williams-Sonoma (nyse: WSM - news - people ), Marriot International (nyse: MAR - news - people ), Federated Department Stores (nyse: FD - news - people ) and May Department Stores (nyse: MAY - news - people ) would see a serious boost in their matrimony-related business.
Gay marriage would inject a sudden growth spurt into an industry whose expansion prospects are constrained by the limited growth in annual marriages. That's not to say that the sector has been stagnant in recent years: The average cost of a wedding has climbed steadily in the last decade to reach $22,000 in 2004, according to The Knot, the largest online wedding site with about 1.1 million new couples registering each year.
The U.S. Census bureau found that roughly 92% of heterosexual couples living together in 2000 were married. We assume for the sake of argument that the same percentage would apply to gay couples. The census estimated that 594,000 homosexual couples were living together in 2000, so we figure that 92% of them, roughly 546,000 couples, would wed if they could. They might not do it right away, but over time they would swell the ranks of would-be brides and grooms.
Of course, when straight couples marry, not all of them hold a reception to celebrate the event. Every year, about 15% of newlyweds pass on the canapés and decide that a quick trip to City Hall suits them better. So we eliminated 15% of our gay couples as well, leaving us with 464,000 couples likely to throw a party to celebrate their nuptials. Then we multiplied that figure by the amount the average heterosexual couple currently spends on such items as engagement rings, banquet halls, wedding dresses and honeymoons. (Click here for more details about our methodology.) Add it all up, and it comes to $16.8 billion.
Gay-Wedding Windfall: Our Methodology
According to the U.S. Census Bureau's Census 2000, there were 54.5 million married heterosexual couples living together and 4.9 million unmarried heterosexual couples living together. We deduce from these numbers that 92% (54.5 million out of 59.4 million) of heterosexual couples living together are married.
We also know from the census that there are 594,000 homosexual couples living together. Extrapolating from the heterosexual percentage, we assume that 92% of the gay couples, or 546,000, would get married if they could. But only about 85% of heterosexual couples who wed have a traditional wedding ceremony, so we assume that same percentage would hold true for gay couples as well. We thus base our calculations on 464,000 gay couples holding a reception with guests.
Reception, Catering And Wedding Planning: $4.7 Billion
According to WeddingChannel.com, the average cost per wedding for reception and catering combined is $9,847.
The math: $9,847 x 464,000 = $4.57 billion
In addition, 15% of couples use wedding planners (15% of 464,000 is 69,600). The cost of such planners usually equals about 10% of the total wedding-day costs, according to the Association of Bridal Consultants. The average wedding-day cost is $22,000, according to The Knot. That means planners make about $2,200 per wedding.
The math: $2,200 x 69,600 = $153.1 million; plus $4.57 billion for reception and catering = $4.7 billion.
Flowers And Décor: $816.6 Million
According to The Knot, the average cost per wedding for these items is $1,760.
The math: $1,760 x 464,000 = $816.6 million
Photography And Video: $1.02 Billion
According to The Knot, the average cost per wedding for these items is $2,200.
The math: $2,200 x 464,000 = $1.02 billion
Music And Entertainment: $659.3 Million
According to WeddingChannel.com, the average cost per wedding for these items is $1,421.
The math: $1,421 x 464,000 = $659.3 million
Wedding Bands: $603.7 Million
According to Condé Nast Bridal Group, the average cost per wedding of these items is $1,301.
The math: $1,301 x 464,000 = $603.7 million
Apparel: $1.31 Billion
According to Condé Nast Bridal Group, the average cost per wedding for the bride's gown and other apparel items is $2,822.
The math: $2,822 x 464,000 = $1.31 billion
Engagement Rings: $1.66 Billion
According to Condé Nast Bridal Group, the average cost per wedding for these items is $3,576.
The math: $3,576 x 464,000 = $1.66 billion
Honeymoons: $1.7 Billion
According to The Knot, the average cost per wedding for this item is $3,657.
The math: $3,657 x 464,000 = $1.7 billion
Invitations And Stationery: $217.2 Million
According to WeddingChannel.com, the average cost per wedding for these items is $468.
The math: $468 x 464,000 = $217.2 million
Cake: $196.7 Million
According to WeddingChannel.com, the average cost per wedding for this item is $424.
The math: $424 x 464,000 = $196.7 million
Gifts: $3.94 Billion
According to the Association of Bridal Consultants, the average amount spent per wedding gift is $85 and the average couple receives 100 gifts. So the average cost per wedding for this item is $8,500.
The math: $8,500 x 464,000 = $3.94 billion
Our Grand Total: $16.8 Billion |
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| To: Tom Caruthers who wrote (52) | 4/7/2004 8:35:22 PM | | From: Glenn Petersen | | | | The Forbes review of The Knot's site:
TheKnot.com
www.theknot.com
Most agree that your wedding day may be the most expensive single day in your life. This site offers a treasure trove of vendors and resources for everything from gowns to gifts to honeymoon packages. Brides-to-be can use the budget calculator, guest list manager and wedding checklist, and create a personal Web page to post details about engagement and wedding plans. Check out the Planning category, which has lots of helpful articles in categories including Food & Drink, The Wedding Party and Sticky Subjects (such as pre-nups, or what to do if your parents take control of your wedding). You can also post your comments or questions in the popular message boards area with topics ranging froms Honeymoon and Reception Ideas to Wedding Withdrawal and Money Matters. Brides can create a registry on the site that offers 20,000 products in departments like fine china, table accents, bedding and bath and sports and leisure. Among the partners are Linens-n-Things and Fortunoff.
BEST: The Gowns area has a comprehensive gallery of over 20,000 dresses for brides, bridesmaids, flower girls and Moms.
WORST: Lots of annoying pop-up windows pushing the sale of the site's products. |
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| To: Glenn Petersen who wrote (54) | 4/28/2004 2:36:59 PM | | From: Tom Caruthers | | | | Glenn,
Any idea why KNOT is down quite a bit in the last couple of days? On less than 30k shares, it has dropped from low $4's to low $3's. I have a few scenarios. Either 1) this is one illiquid stock 2) bad news has leaked and is causing near term pressure on the stock, or 3) market makers or others are moving the stock down to accumulate in advance of good news (positive earnings, takeover, etcv). Given the low volume, I think it is a combination of the #1 and #3 scenarios. What you do notice on the intraday charts is that the stock is often taken down on <1000 shares and then a larger block is moved at that lower price.
In fact, I think an acquisition of KNOT would be a good move by some of these internet based companies - IVillage, Yahoo, MSFT, etc.
I have to believe that online advertising is doing well given Yahoo's performance and that the company's businesses (publications, merchandise sales, etc) are doing well given that this is the prime time of year for organizing weddings.
I wonder...Perhaps I will try to accumulate more.
Tom |
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| To: Tom Caruthers who wrote (56) | 4/28/2004 2:55:16 PM | | From: Glenn Petersen | | | | Tom,
I noticed the drop about fifteen minutes before your post. I have not been able to find anything that would account for the drop. I even checked out the SEC website. Nothing. I would be more inclined to cite the fact that the stock is illiquid. I would not expect any news until after the annual meeting, which is scheduled for May 13.
This would make a good acquisition candidate for someone. I would add Barry Diller's IACI to your list of potential suitors.
At $3.30, an excellent buying opportunity IMHO. |
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| To: Glenn Petersen who wrote (57) | 4/29/2004 6:39:41 PM | | From: Tom Caruthers | | | | Hi Glenn,
What is happening with KNOT I have seen many times before. Today's volume was 20,000+ shares and the stock does not move. There is accumulation by the MM's on this stock. I think the stock will move sharply up by earnings. I guess we will see.
Tom |
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| To: Glenn Petersen who wrote (57) | 5/12/2004 10:23:59 AM | | From: Tom Caruthers | | | | Hi Glenn,
KNOT announced earnings today. Essentially a breakeven quarter with a $98k loss on significantly higher revenues (13%) due mainly to increased ad and sponsorship revenues.
They had some problem with their merchandise distribution network which is a near term negative and led to 15% decrease in merchandise sales. Also, they increased sales and marketing and G&A. However, if they can boost sales of merchandise, with solid growth in their other divisions, I think they can pull out at least $1M per quarter going forward.
Tom |
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| To: Tom Caruthers who wrote (60) | 5/12/2004 3:52:40 PM | | From: Glenn Petersen | | | | Tom,
I am also very encouraged by the report. Advertising revenues were up 39% and the number of average monthly page views increased from 73 million in the first quarter of 2003 to 160 million during the first quarter of 2004. I am in agreement with you; if they can get their logistics systems running smoothly, they should be able to start enjoying some solid profitability.
Glenn |
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