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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
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?
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.
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 that behaviorist may be changed.
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 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, 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.
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.
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 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
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.
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, 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.
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 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 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, 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 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.
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 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?
Yeah, my understanding is something like more than twenty thousand suppliers that you're working with.
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 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 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.
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
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 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 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.
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 that sentiment, and then there's actual actions. Do you think
the consumer is slowing down? The consumer is stressed right now?
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 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 through that and our ability to continue to gain share in that environment.
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.
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,
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 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 perspective will take share within you know, see this chair category.
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.
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 balance sheet to be able to continue to deliver that going forward, and.
Your suppliers to feel confident about being able to navigate kind of all this craziness that's going on.
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.
All right, So enjoy it, Kate, thank you so much. Be well, Kate Olliver, She's.
Nice to talk to you again.
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