(Reuters) – Etsy missed Wall Street expectations for first-quarter gross merchandise sales (GMS) and profit on Wednesday, hurt by lower demand for its handcrafted goods and personalized gifts at its online marketplace.
WHY IS IT IMPORTANT?
Despite Etsy ramping up spending over the past quarters on promotions and advertising, it struggled to keep up with larger retailers in attracting bargain-hungry customers.
It is also facing increasing competition from low-cost e-commerce platforms such as Temu.
CONTEXT
Persistent inflationary pressures have put off customers from spending on big-ticket non-essentials product categories including vintage handicrafts, jewelry and home decor.
KEY QUOTES
“Our first quarter performance …was pressured by the challenging environment for consumer discretionary products, which continues to be a headwind to Etsy marketplace growth,” said CEO Josh Silverman.
“While considerably larger than it was pre-pandemic, Etsy is struggling to find ways to expand beyond its niche and attract buyers as Amazon and Walmart eat up a larger share of ecommerce spending,” Eachel Wolff, analyst with eMarketer said.
BY THE NUMBERS
For the quarter, the company posted consolidated GMS – a key metric to measure sales – of $3 billion, compared to analysts’ average estimate of $3.12 billion, according to LSEG data.
The company posted quarterly revenue of $646 million, roughly below analysts’ expectations of $646.3 million. It earned 48 cents per share, below estimates of 49 cents per share.
The company’s net income for the quarter was $63 million, compared with $74.5 million last year. Analysts on average expected $67.39 million, according to LSEG data.
MARKET REACTION
Shares of the company, which fell nearly 32% in 2023, were down nearly 14% in trading after the bell.
(Reporting by Anuja Bharat Mistry in Bengaluru: Editing by Tasim Zahid)
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