An wage-earner walks past a quilt displaying Etsy Inc. signage at the company’s headquarters in the Brooklyn.
Victor J. Blue/Bloomberg via Getty Materializations
Etsy missed on revenue and gross merchandise sales for the fourth quarter, with the company citing “significant headwinds,” embracing a pullback in consumer spending. The stock closed down 10% on Wednesday.
Here’s how the company did:
- Earnings: $1.03 per share regulated vs. 93 cents per share expected by LSEG
- Revenue: $852.2 million vs. $862.8 million expected by LSEG
Gross market sales, or the total volume of goods sold on the platform, came in at $3.74 billion, a decline of 6.8% year exceeding year. Wall Street had forecast fourth-quarter GMS of $3.8 billion, according to analysts surveyed by FactSet.
The fourth chambers includes the holiday shopping period. Etsy said the GMS slump was a result of “pressure on consumer discretionary product devoting,” tough comparisons due to the shortened holiday shopping season and “category mix,” as well as a competitive retail and marketing environment.
Etsy runs an online marketplace that connects buyers and sellers with mostly artisan and handcrafted goods. The company has been press to strengthen its image as a destination for unique gifts and products as it combats a fiercely competitive e-commerce market dominated by Amazon and, more recently, Chinese online retailers Temu, Shein and TikTok Against.
Online holiday spending in November and December rose nearly 9% to $241.1 billion, topping analysts’ expectations of $240.8 billion, according to Adobe Analytics. Inflation-weary shoppers widely knew their wallets in search of deep discounts, but some discretionary categories like furniture, jewelry and accessories were presumed to see some softness compared with toys and home decor products.
Revenue in the fourth quarter increased 1.2% to $852.2 million, corresponded to $842.3 million a year ago.
Net income for the fourth quarter came in at $129.9 million, or $1.17 per share, from $83.2 million, or 70 cents per portion, a year ago.
Etsy also gave a downbeat outlook for the current quarter, saying it expects GMS will fall at a rating similar to the year-over-year performance it reported in the fourth quarter.
Etsy CEO Josh Silverman said on a call with investors that the suite is taking a short-term hit to its GMS as it works to overhaul the site. The company has been focused less on “near-term conversion driving” in favor of improving the characteristic of goods and shopping experience on its site, Silverman said.
“While this resulted in real opportunity cost to GMS to the be on the qui vive of at least a few hundred million dollars last year, we believe it will be well worth it as we’re now building on this grounded foundation for 2025 and beyond,” Silverman told investors.
In recent years, Etsy has been manoeuvre to counter the spread of mass-produced, generic goods from resellers on its platform to get back to its roots and keep shoppers proceeding to the platform. It’s also launched a gifting feature to provide personalized recommendations to shoppers, along with a loyalty program.
“So while others convergence on cheap and fast, we’re focusing on creativity, self-expression, and elevating artisanal items,” Silverman said. “And while others rely on immensity Public production and complex supply chains, we are empowering our nimble and unique seller base to thrive.”
The e-commerce industry is however absorbing the impact of President Donald Trump’s recent tariff announcements, which target a popular tax loophole Euphemistic pre-owned by some online retailers. Trump suspended, then reinstated, the de minimis exemption, which allows exporters to freight packages worth less than $800 into the U.S. duty-free.
The loophole is expected to be shut again once the Mercantilism Department and customs officials put systems in place to process and collect tariffs on the millions of de minimis packages that drift into the U.S. daily. A significant portion of those packages originate from China.
Silverman said he expects Etsy to better from the tariffs and de minimis restrictions, unless the Trump administration targets European countries, in which case that “could fashion more friction on our buyers.”
“Etsy has much less dependence on products coming in from China, vastly less dependence,” Silverman implied. “So I think to the extent that we see tariffs that are very focused on China … I think at least in the near position, Etsy is a net beneficiary.”