The Knot: Here Come The Brides

Marching Up The Aisle
Weddings are big business, and The Knot (KNOT ) is a pure player in that hot market. Weddings account for $72 billion in annual domestic retail sales, notes CEO David Liu, who says The Knot's revenues have jumped from $24.1 million in 2001 to $41.4 million in 2004. The company turned profitable in 2003, earning $1 million, or 5 cents a share. In 2004, it made $1.3 million, or 7 cents.

Just six years old, the company provides information, products, and services on its Web site and in its magazines to couples planning to get married. Its services include a registry where engaged couples list their gift preferences at specific stores. The Knot has inked a pact this month with Target (TGT ) for the retailer to offer its products on The Knot Web site, which has one million active members. Target is the largest wedding gift registry retailer. Liu says The Knot's services span the period from engagement to motherhood. Justin Cable of securities firm B. Riley says The Knot's online business showed solid growth in 2004 and should expand again this year. Rob Amman, managing partner at R.K. Capital Management, which owns stock, says the shares, now at 7.20, are cheap, in light of The Knot's rapid growth and high-margin (75%) business. He sees it earning 9 cents a share in 2005 on sales of $50 million. But that will jump to 46 cents next year, he says, on sales of $60 million, due to a widening in the margins and a jump in vendor ads on its Web site and magazines.

Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

By Gene G. Marcial

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