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Speaker 1 (00:02):
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Speaker 2 (00:07):
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Speaker 3 (00:22):
Another stock that's been rallying in a big way today,
in fact, up about eight and a half percent at
its highs is Wayfair stock right now still again about
three and a quarter percent, rallying after earnings. Results came
in better than expected as consumers brought forward spending while
suppliers are holding back from price increases. We should put
out the stocks off about thirty percent year to date.
Kate Gulliver is the chief financial officer at Wayfair, which
(00:45):
delighted to have her back with us. She joins us
once again from Boston. Kate, how are you and how
is your environment? It's been about a month since we
last talked. How has it changed?
Speaker 4 (00:56):
Yeah, you know, great question. I guess i'd just start
with first, you know, the printed this morning. We feel
great about the quarter, the strength and the top line,
frankly in the US segment, and ultimately the flow through
to adjusted EBITDA, you know, the enduring strength in the business. So,
you know, we feel like we're on very solid ground
right now.
Speaker 1 (01:14):
We saw earlier and even earlier this week as well
from companies such as Meta Platforms, but mostly Microsoft. And
then of course with the GDP figure that companies and
people are pulling purchases forward. I'm curious what you saw
on the platform over the last month in terms of
what customers are buying, how they're buying it, and how
(01:36):
that behaviorist may be changed.
Speaker 4 (01:38):
Yeah, it's a great question. You know, we shared on
the call this morning. There's one category where we have
seen some pull forward of demand, and that's an appliance
is So you know, we don't do a large business
and appliances. We've gone to that business a few years ago.
But that category we have seen what we would call,
you know, a pull forward of demand. We actually have
(01:58):
not seen a pull for demand in sort of the
core furniture part of the business. You know, we look
at this on a variety of different metrics around you know,
search volumes, traffic version, et cetera. And from everything that
we're seeing you know, over the past month to your question,
we've not really seen you know, any discernible pull forward
on the furniture business really just on the appliance part,
(02:20):
and the appliance part is a very small part of
our business in total. And obviously, you know, the last
month that you're referred to, you know, would be post
the quarter that we've posted this morning, which ended on
March thirty.
Speaker 1 (02:29):
First, is that lack of pull forward a sign at
all to you of a lack of confidence that the
consumer has in their situation right now? Is it concerning
to you? These are obviously big purchases, we're talking furniture here.
If consumers don't feel comfortable buying those, then they might
not buy.
Speaker 4 (02:46):
Yeah, great question. So you know, first, our average AOV
is about three hundred dollars, right, so we sell range
of products and the average ticket size of about three hundred.
We did say actually the demand had been quite healthy
in in April quarter to day period, and so we
feel very good about where demand is. I do want
to point out that our category, you know, we're hearing
(03:07):
a lot of noise in the consumer and certainly something
that we're following very closely and you know, monitoring quite thoughtfully,
but we are in our category, we've been in a
position where our category has actually been down for multiple
years in a row at various points from sort of
twenty you know, back half of twenty one to current
(03:27):
you know, our category has been down double digits during
some of that time. Over this last quarter, you know,
we still saw the category under pressure in the US.
So we're talking about a category you know that his
head actually sort of a negative consumer impact for some
time after obviously a big pull forward in the beginning
of COVID.
Speaker 3 (03:45):
Well, that's interesting, yeah, exactly right there, I mean COVID
was crazy, right. I'm assuming we all talked about everybody doing,
you know, buying for their home because they were living, working,
doing everything in their home. Does the environment feel well
after a couple of years of things being pulled back,
does it feel more normal? How do you describe today's environment,
(04:06):
especially Kate, when we talked to so many leaders and
heads of companies where you know they're using the word uncertainty.
You've got you know, as Tim mentioned, you know, companies
giving out dual earnings outlooks depending on what happens out
of the White House and in terms of terrorf So
I'm just curious how you would kind of describe it.
Speaker 4 (04:24):
Yeah, it's a great question. So maybe to start with
our category and some of the evolution of our category
over this period. To your point, we had significant pull
forward in the category in the COVID time, right, so
in the sort of twenty twenty twenty twenty one time.
Since then, the category has been down consistently since then.
And actually when we look at the data, if you
were to take a normalized growth rate from twenty nineteen
(04:47):
to now, you know, typically is a category that grows
somewhere on the order of three to four percent a year.
If you were to sort of straight line that out,
we're quite a bit below where the trend line is.
We actually think on a basis or on a sort
of total sales basis for the category, the category itself
is actually below you know, starting to be below twenty
nineteen levels, right, So we're seeing a category that has
(05:07):
historically been over the last few years quite depressed, which
may be different than you know, some of the other
consumer discretionary categories that the folks are referring to. That said, yes,
it's it's absolutely an uncertain environment. This category. Well, it's
not down as much as it was in sort of
twenty two to twenty three. It was still down the
last quarter. So our focus then becomes on share gain, right,
(05:29):
So if the category is uncertain, if the overall consumer
environment is uncertain, what we want to do is make
sure that we're gaining share. We've done that consistently every
quarter since the fourth quarter of twenty two, and that
we're doing that in a very cost discipline way. And
that's where you've seen us grow our margins and adjusted
EBITDAD dollars throughout that period as well. So you know,
certainly there's a lot of noise out there, there's a
(05:51):
lot of uncertainty within that. We're trying to control what
we can control, and to us, that results in share
gain and you know EBADUG growth.
Speaker 1 (05:59):
Hey, Kate, I think I think it's fair to say maybe
not all customers know that you're a marketplace. You don't
necessarily have inventory when people are looking at the Wayfair platform,
but you have relationships with all of these suppliers and
you have many suppliers. But I want to ask you
to characterize what you're hearing from these suppliers because they
are the ones who are affected by tariffs. Such a
(06:19):
small portion of this stuff is actually made in the US.
What have the conversations been like with the largest folks
on your platform? What are they saying?
Speaker 3 (06:27):
Yeah, my understanding is something like more than twenty thousand
suppliers that you're working with.
Speaker 4 (06:32):
Yes, that's exactly right. So I appreciate that you know it.
And to your point, you know, mostly to the consumer,
it reads like a retailer. On the front end, you're
absolutely right in terms of the dynamic. But on the
back end you have the benefits of a marketplace and
we do think that is a benefit to us during
this time because we work with over twenty thousand suppliers
from around one hundred different countries including the US. There
(06:54):
is some you know, domestic manufacturing in this space, but
you know, we work with suppliers from all over the
world world. These suppliers range in size, you know, they
have a wide range of categories that they're involved in.
In those categories all have different dynamics. I will point
out that no single supplier comprises any meaningful portion of
our sales. So you know, from a sales perspective, the
(07:15):
suppliers are quite diversified, and what we are focused on
with our suppliers is partnering with them right now to
have conversations around what levers are at their disposal depending
on you know, how the environment works from here and
to us, that means helping them understand, you know, where
we're seeing demand, what we're seeing in terms of price elasticity.
(07:37):
So if they were to change whole sales, what does
that resultant from a price elasticity perspective, and how might
that impact them in their given category. Many of our
products are highly substitutable, So you know, let's take this
chair I'm sitting on right now. We probably sell miniature
quite similar to this chair. So if you're a supplier
and you raise price in that category, you could be
(07:59):
at a dis advantage. Then somebody else has been able
to maintain a more cost efficient wholesale and so that's
something we help the suppliers understand and you know, share
information with them on. We also talk them through what
other levers they have. During a time where you might
have some you know, demand disruptions, how do they think
about leaning in and using our three pl program called
(08:19):
castle Gate to be able to get inventory, you know,
into the country. We actually did talk about in the
first quarter some whole forward of inventory into the castle
Gate network to land ahead of you know, tariff conversations.
How do they think about posts, how do they think
about supplier advertising or retail media. So all of these
are tools in their toolkit, and our focus is really
(08:40):
partnering with these suppliers so they're getting the same information
that we're getting and we're helping to think through, you know,
these different levers and what is best to pull.
Speaker 3 (08:47):
When I am curious in terms of the consumer, you
said that they bought a lot of appliances. That's a
smaller part of your business or small part that they
weren't pulling forward in terms of furniture. Is that I mean,
I don't know if you understand this world more than most,
And I'm just curious. Do you think consumers we've talked
about we're seeing consumer sentiment. We've all seen the numbers
(09:08):
that sentiment, and then there's actual actions. Do you think
the consumer is slowing down? The consumer is stressed right now?
Speaker 4 (09:17):
Yeah? You know, I won't I guess I won't speak
to the consumer broadly. I can tell you what we're
seeing in the category. The category itself was down in
Q one, right, So we look at a variety of
different panels for the category, you know, various credit card panels.
We also talk to suppliers because we work with twenty
thousand of them, so we have a pretty good read
on what's happening with the category as a whole. And
(09:38):
when we look at the US four Q one, the
category was down. Now in our case, that's a continuation
of a trend that's been going on for quite some
time in the category, you know, as I said, has
been down since you know, sort of let's say, back
half of twenty one. So the category itself has remained
under pressure. We haven't seen an alleviation you know, of
that pressure. That said, we feel good about our navigating
(10:01):
through that and our ability to continue to gain share
in that environment.
Speaker 1 (10:04):
How do you see that holding up if tariffs remain
in effect or if we don't see if we don't
see one hundred and forty five percent tariff come off
of China.
Speaker 4 (10:15):
Yeah, you know, I go to the dynamic of the
marketplace and what we're really focused on driving there, which
is helping suppliers understand the competitive dynamics and our ability
to work with suppliers from all over the world. So
certainly we work with supplier from China, but we work
with supplier India, Turkey, Brazil, Southeast Asia, Mexico, the US,
(10:36):
right everywhere. And so what you'll see happen, you know,
as different teriff rates evolve, is suppliers want to be
quite prudent in making sure particularly because frankly, demand has
been so slow for them over the past few years.
How do they be thoughtful about you know, if and
when they modulate prices and if and when they modulate
(10:56):
you know, availability, because what they want to do is
maintain share some cases, you know, if they see an
opportunity gain share within a category that they sell on us.
And this is where the substitution helps because if one
specific geography or region is more impacted than another, you
can see that other reason will actually start to take share. Right,
so suppliers that actually are not disadvantage from a price
(11:17):
perspective will take share within you know, see this chair category.
Speaker 3 (11:20):
All right, So it sounds like glass more half full
in terms of the outlook, I'm just trying to gauge.
I mean, it does sound like your suppliers have a
lot of move But give us an idea if you
had to use a word to kind of describe the
environment today. You have such a great read on the
consumer and spending just as we wrap up what would
be that word, But.
Speaker 4 (11:37):
You know, it is a very fluid environment, and our
focus is on controlling what we can control, and we
think we're set up quite well to continue to offer
our consumer to the best value. And you know, that's
the best that we can do during this time deliver
for our consumer, and we feel in partnership with our suppliers,
we're going to be able to do that. And we're
set up on a nice cost structure and a nice
(11:58):
balance sheet to be able to continue to deliver that
going forward, and.
Speaker 3 (12:00):
Your suppliers to feel confident about being able to navigate
kind of all this craziness that's going on.
Speaker 4 (12:06):
Yeah, I mean, certainly, you know, we want to partner
with them to help them because there is a lot
of noise out there, and so we're trying to help
them sort of navigate through this. But you have suppliers
a range of scale, a range of sophistication, a range
of geographies that they work in, and you know, we
feel good about our ability to help them navigate through.
Speaker 3 (12:23):
All right, So enjoy it, Kate, thank you so much.
Be well, Kate Olliver, She's.
Speaker 4 (12:27):
Nice to talk to you again.
Speaker 3 (12:28):
Same here. She's the chief financial officer over at Wayfair.
As we mentioned, their stock definitely popping and out performing
the overall trade today, up as much as eight and
a half percent right now tim with about a three
and a quarter percent game