Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Well share is a Wayfair. We're keeping a watch on
Speaker 2: that one, dropping a lot down about sixteen percent at
Speaker 2: their lows on earnings, a four month low intra day
Speaker 2: as active customers during the fourth quarter came in slightly
Speaker 2: below street expectations. Now the Street weighing in on the results,
Speaker 2: William Blair saying that the six point nine percent growth
Speaker 2: in net revenue likely fell short of buyside expectations. But
Speaker 2: you had some peers rh our House and also William's
Speaker 2: Sonoma under some pressure in the trade, so investors looking
Speaker 2: at the group overall. Let's get a little bit more
Speaker 2: on the outlete. We want to head to Boston.
Speaker 1: We got Kate Goliver back with us CFO of Wayfair. Kate,
Speaker 1: good to have you on the program. Tell us a
Speaker 1: little bit about the quarter, because interestingly enough, Jeffries says,
Speaker 1: this is attributable to colder weather to start the year.
Speaker 1: Anything about the guidance regarding is it about colder weather?
Speaker 3: Yeah, well, maybe let's step back and sort of to
Speaker 3: the quarter we just reported, and then I'm happy to
Speaker 3: shift to guidance. You know, we feel really great about
Speaker 3: the quarter. We just reported. I think it highlighted and
Speaker 3: capped off a year of incredible momentum for us. We
Speaker 3: opened up the year flat, we you know, exit of
Speaker 3: the year at seven percent, revenue growth eight percent, you know,
Speaker 3: managing for the exit of Germany, and we flowed through
Speaker 3: to improved ebita. Ibata grew year over year about sixty percent. Right,
Speaker 3: So we're seeing both ongoing market share gains and improved profitability.
Speaker 3: And that story continues with our guide into Q one.
Speaker 3: We feel really good about the guide, the you know,
Speaker 3: mid single digits revenue growth and improved adjust at Ebata
Speaker 3: throughout the quarter. So you know, when we look at it,
Speaker 3: we feel that we produced pretty strong results.
Speaker 2: Yeah, I mean you look at the quarter, I mean
Speaker 2: just at EPs, better than what the street was expecting.
Speaker 2: Just at Ebada, as you said, coming in stronger, net
Speaker 2: revenue up about seven percent year over year, gross margin,
Speaker 2: coming in better than the street estimate. There were a
Speaker 2: lot to do. So maybe we talk a little bit
Speaker 2: about you know, I am curious. You know, you guys
Speaker 2: have dealt with the call and so on and so forth.
Speaker 2: What are you hearing from the investment community that they're
Speaker 2: not just so comfortable with Kate.
Speaker 3: Yeah, you know, actually, you know, as we talked to investors,
Speaker 3: I think again there they're pleased with the momentum that
Speaker 3: we see here. You know, obviously we're in a category
Speaker 3: that has been under pressure, right, So the category itself,
Speaker 3: we think was down low single digits in the fourth quarter,
Speaker 3: you know, to your earlier questions sort of around whether
Speaker 3: in the first quarter, we do think the category has
Speaker 3: been impacted in the first quarter of this year, you know,
Speaker 3: likely you know, down low single digits again, maybe slightly
Speaker 3: worse even than Q four. So there's certainly some complexity
Speaker 3: in the overall category here. You know, what can we
Speaker 3: focus on. We can focus on what we can control,
Speaker 3: and our share gain continues to be a real source
Speaker 3: of strength. You see us outstripping a category by several points, right,
Speaker 3: and that's continued, you know, Q three, Q four and
Speaker 3: then again into the guide in Q one.
Speaker 2: And we should point out that investors have been really
Speaker 2: keen on your stock, I mean, nearly double over the
Speaker 2: past year. Kate, let me just go to what you said.
Speaker 2: I mean, maybe it is those concerns about some softer
Speaker 2: active customer trends kind of early on in the first quarter,
Speaker 2: do you give us an idea of what you're seeing
Speaker 2: in any idea or can you tell them as if
Speaker 2: it continues.
Speaker 3: It's a great question. So active customers is one of
Speaker 3: our reported KPIs. It's actually a lagging indicator. Okay, That
Speaker 3: metric is LTM active customers, So anyone who'd sort of
Speaker 3: placed an order within the last twelve months and as
Speaker 3: orders grow, and you do see that order volume grew
Speaker 3: in Q three and in the quarter we just reported
Speaker 3: Q four, that sort of precedes active customer growth. The
Speaker 3: other thing I do just want to point out there
Speaker 3: is we did exit in January of last year or
Speaker 3: German Business, so that took a large chunk of customers
Speaker 3: or not a large chunk, but a chunk of customers
Speaker 3: out of that number. And so as you're looking at
Speaker 3: that active customer number, you know obviously that came out,
Speaker 3: so we'll clear that comp you know, we exited that
Speaker 3: in January of this past year.
Speaker 1: You did say the sector has been under pressure, and
Speaker 1: Carol mentioned some of the piers, but what about the
Speaker 1: wayfair consumer when they're buying something on the platform right now,
Speaker 1: are they buying it because they need to replace something
Speaker 1: in their home? Are they buying it because they have
Speaker 1: extra money to upgrade something. What's the profile of the consumer,
Speaker 1: and in other words, how is the consumer doing.
Speaker 3: It's a great question. We're seeing a few trends. So
Speaker 3: you mentioned some of the sort of luxury peers. Obviously,
Speaker 3: we have high end brands that do compete with those players,
Speaker 3: like a paragold or specialty retail brand. The Wayfair brand itself,
Speaker 3: you know, plays all the way from opening price point
Speaker 3: to you know, upper end mass, so really spans the
Speaker 3: full range. And we have seen, you know, a divergence
Speaker 3: some of that ke shaped economy. I'm sure we've all
Speaker 3: been talking about now for a bit. Certainly, our paragold
Speaker 3: brand or specialty retail brands are growing, you know, really
Speaker 3: north of twenty percent we said in twenty twenty five,
Speaker 3: so you can see that accelerating beyond you know, the
Speaker 3: overall core business. And I think that speaks to the
Speaker 3: strength and that you know, higher net worth consumer. We
Speaker 3: also do see a bit of a divergence in the
Speaker 3: types of things that people are buying. When I talk
Speaker 3: about the category being down low single digits, that's a
Speaker 3: category overall. We actually think furniture or bigger ticket items
Speaker 3: are down more. That tends to actually be where we
Speaker 3: you know, are more focused and have a bigger part
Speaker 3: of the business. But you know, we also of course
Speaker 3: sell decorative accents, seasonal decor. That part of the business
Speaker 3: seems to have done a bit better from a category
Speaker 3: perspective overall, So those would be lower ticket items you know,
Speaker 3: that may feel more comfortable for folks to purchase right now.
Speaker 2: Well, and the other thing I want to ask you
Speaker 2: and listen, Kate, we're obsessed with this the buy now,
Speaker 2: pay later and you can do that on Wayfair too.
Speaker 2: Are you seeing an uptick in that.
Speaker 3: Yeah, we have a number of options, you know, for
Speaker 3: various financings and buy now pay laters. We work with
Speaker 3: a wide range of partners. I do think it's an
Speaker 3: important offering for the consumer, so you know, to you know,
Speaker 3: sort of sort of ensure good underwriting for folks and
Speaker 3: provide them with a lot of optionality. I would say
Speaker 3: our penetration there has been lower than other more traditional
Speaker 3: brick and brick and mortar furniture retailer. So you know,
Speaker 3: as we grow, we're really trying to get to you know,
Speaker 3: sort of a more natural place there for the furniture
Speaker 3: industry overall.
Speaker 1: We're speaking with Kate Goliver, CFO of Wayfair, joining us
Speaker 1: from Boston.
Speaker 2: You know, Kate, one of the other things that we've
Speaker 2: talked with you about is the physical stores, and you
Speaker 2: have noticed some encouraging early performance from the physical stores
Speaker 2: when it comes to brand engagement and cross channel lift.
Speaker 2: As you think about or as you kind of move
Speaker 2: from proof of concept to a potential expansion, what specific
Speaker 2: performance thresholds are you kind of focusing on and would
Speaker 2: justify accelerating the physical store growth.
Speaker 3: Yeah, it's a great question. So we look at the
Speaker 3: economics of the store itself, so purchases that are directly
Speaker 3: attributable to the store, and the economics of you know,
Speaker 3: operating that store. So as you think about the overall store,
Speaker 3: four wall, P and L. But one of the unique
Speaker 3: things about you know, building stores are we have a
Speaker 3: well established e commerce brand, is you do get to
Speaker 3: see a benefit in the area for the brand overall.
Speaker 3: But the other thing that we look at is, you
Speaker 3: know what in sort of industry partlance you might call
Speaker 3: the halo effect, but really sales that are attributable to
Speaker 3: folks that maybe came into the store and then you know,
Speaker 3: left and went and bought something, or you know, had
Speaker 3: an idea about the store being in the area because
Speaker 3: they've heard more about it, and therefore then shopped in
Speaker 3: our a platform. And we've seen that continue to hold
Speaker 3: in really nicely. We gave a stat in our updated
Speaker 3: investor presentation today that the first store, which is in Chicago,
Speaker 3: if you look at the entire state of Illinois versus
Speaker 3: the rest of the country since the store opened, it's
Speaker 3: had a ten percent cag or higher than the rest
Speaker 3: of the country. And that gives you a sense of,
Speaker 3: you know, the momentum that you can get from the store.
Speaker 3: It's obviously very crude metric, but it's an easy way
Speaker 3: to sort of explain it. So we really look at
Speaker 3: the combination of the store, P and L and then
Speaker 3: the other benefits that come along with having the store.
Speaker 2: Well, that makes me want to follow, like what metrics
Speaker 2: would cause you to maybe remain a little bit more cautious,
Speaker 2: So like if you open another's store and the metrics
Speaker 2: aren't so you're not seeing that kind of momentum that
Speaker 2: you're getting in the Chicago store, we just just say, Okay,
Speaker 2: maybe it just depends on the city of the environment, like,
Speaker 2: there's a lot of specifics that can go into it.
Speaker 3: Yeah, you know, I think our focus right now is
Speaker 3: on learning more about what makes a great store. Right.
Speaker 3: So we have one store open. We're playing to open
Speaker 3: three more in twenty six. We have one opening soon
Speaker 3: in the Atlanta area, another one this summer in Columbus,
Speaker 3: and then in the fall in Denver. These will be,
Speaker 3: you know, the Columbus store, for example, seventy thousand square
Speaker 3: feet versus the you know other stores are roughly around
Speaker 3: one hundred and fifty thousand square feets. So we're testing
Speaker 3: out a slightly smaller format. We're testing out different types
Speaker 3: of shopping areas where we put the store, and so
Speaker 3: we intend to learn and then continue to refine the
Speaker 3: store model based on those learnings. So do you know,
Speaker 3: we are quite excited about it as a channel.
Speaker 1: Hey, let's go from sort of like the old school
Speaker 1: store retail model to then what you're doing with AI
Speaker 1: and layer and cause stores old school, So they are
Speaker 1: I mean, they're coming.
Speaker 3: Back right channel. We like the overall omni channel experience,
Speaker 3: but but how.
Speaker 1: Do you layer in personalization with AI? And I'm curious
Speaker 1: how you do that in a way that actually makes
Speaker 1: you more competitive in this area.
Speaker 3: Yeah, we're we're really excited about what we can do
Speaker 3: with AI from the customer experience perspective, and we've already
Speaker 3: started some of that and piloted some of that on
Speaker 3: the site, and there's certainly more to come there. You know,
Speaker 3: I think this category is a bit unique in that
Speaker 3: respect because it's a category that is a highly emotive category. Right.
Speaker 3: It feels very personal to folks. It's not a commodity
Speaker 3: category where you're doing sort of standard replenishment. You want to,
Speaker 3: you know, get a better sense and see the actual
Speaker 3: options out there. The brand is important, you know, our
Speaker 3: brand is important because you want to ensure the delivery
Speaker 3: experience is high quality. So we think that the category
Speaker 3: itself lends itself to bringing people to our site and
Speaker 3: engaging them in a unique way. One thing that we
Speaker 3: can do with AI is help get more personalized for
Speaker 3: your style preferences. You know, I'm sure if the three
Speaker 3: of us we're to pick an end table, we'd all
Speaker 3: pick different end tables. What we'd love to do is
Speaker 3: make sure that when we land on the site, we're
Speaker 3: serving up to each of us exactly that end table
Speaker 3: that we want. Generative AI allows us to do that
Speaker 3: in a faster, more nimble way. It also allows you
Speaker 3: to play around with discovery. So if you were to
Speaker 3: go on the app today into the discover tab, you'd
Speaker 3: see a whole catalog of images and you can create
Speaker 3: more yourself if you want that. Are you know Jennai
Speaker 3: created that? Then allow you to shop the catalog based
Speaker 3: on the type of room that you're designing or the
Speaker 3: aesthetic look that you're looking for. And I think that
Speaker 3: kind of engagement and interaction is really compelling in this category.
Speaker 2: So I know, Kate, if we had asked Tim, like
Speaker 2: if we were going you, me and him shopping for pillows,
Speaker 2: you know he would say, no more pillows. I don't
Speaker 2: know about your household, but that's what happens in my
Speaker 2: house anyway.
Speaker 3: What originally people have an insatiable demand for pillows, so
Speaker 3: we will keep selling them.
Speaker 2: Thank God, thank God. I always appreciate getting time. It
Speaker 2: is a great read on the consumer and finding out
Speaker 2: what's going on. Kow Well, thank you, Kate Gulliver. She's
Speaker 2: the chief financial officer of Wayfair