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Pinterest appeals most to this age group

BY Dan Berthiaume

One demographic in particular may want to break into a chorus of The Who’s “My Generation” when they use Pinterest.

New data from Pinterest shows that more than one in three of Pinterest’s 100 million global users are Millennials. With 75% of all content saved by Pinterest users coming from businesses, this reflects an opportunity to present brands and products to a Millennial-heavy audience.

In addition, 79% of Millennial Pinterest users say the platform is a “guide to life and is a place to teach me how to do things,” compared to 71% of all Pinterest monthly users. Eighty-four percent of Millennial Pinterest users say the platform is where they search and discover things related to health and fitness, compared with 64% of Pinterest users overall.

Other notable findings include:

• Sixty-six percent of Millennials use Pinterest for baby and parenting search and discovery, compared to 45% of total Pinterest users.

• Eighty percent of Millennials say that Pinterest “helps me find things I want to buy.”

• Seventy-two percent of Millennials say the network “helps me connect with brands I love.”

• Seventy-one percent of Millennials say the platform “recommends relevant products to buy.”

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Online marketplace Etsy outlines path to profitability

BY Mike Troy

Etsy’s goal of “reimagining commerce,” is a long-term proposition, which explains why after the company lost money again in the fourth quarter it tempered the news with a rosy three year sales and profit forecast.

Etsy operates an online marketplace designed to connect sellers of unique and handmade goods with buyers and in the fourth quarter its platform facilitated $741 million in gross merchandise sales or GMS. That’s a 21.3% increase from the prior year. Revenues to Etsy from those sales combined with the services it provides to sellers increased 35% to $88 million. The increased volume was driven by more people using the platform to sell and buy unique products.

Etsy said the number of active sellers increased 15.5% to 1.6 million and the number of active buyers increased 21.4% to 24 million. The company broadly defines “active” as someone who sold or bought within the past year.

Despite the increased activity, Etsy reported a net loss of $4.2 million, or four cents a share, compared to a net loss of $5.4 million, or 12 cents a share in the fourth quarter the prior year. For the full year, Etsy reported a loss of $54 million, or 59 cents a share, compared to a prior year loss of $15.2 million, or 38 cents a share.

"We are proud of our progress in 2015. We hit many important milestones that are the building blocks for long-term, sustainable growth," said Etsy chairman and CEO Chad Dickerson. “We executed against our strategic priorities, particularly in mobile, where we began to narrow the gap between mobile visits and mobile GMS. We also enhanced our existing seller services and continued to bring new constituents into the Etsy Economy.”

Etsy is like many retailers these days in that it discloses one set of number that meet generally accepted accounting principles (GAAP) and another set adjusted to exclude certain expenses which don’t, but the company asserts are important when evaluating the business.

For example, on an adjusted basis, Etsy’s non-GAAP earnings before interest, taxes, depreciation and amortization (EBITDA) in the fourth quarter increased to $14 million from $9.2 million and for the year grew to $31 million from $23 million.

Looking ahead, the company took the unusual step, especially for an e-commerce company which went public last year, of providing investors with a three year forecast of its adjusted EBITDA and other growth metrics.

"We believe Etsy has significant opportunity ahead and we remain committed to delivering long-term, sustainable growth to all our stakeholders. One of our key values at Etsy is open and transparent communication. In that spirit, we are providing this additional long-term guidance to better demonstrate how we believe our strategic initiatives will translate to our financial results over the next three years," said Kristina Salen, Etsy’s CFO.

Over the next three years the company said it expects gross merchandise sales on the platform to increase between 13% and 17%, translating to revenue growth in the range of 20% to 25%. Gross margins are forecast to be in the mid-60% range with adjusted EBITDA hitting a mid-teen percentage by 2018.

As for three year financial targets on a GAAP basis, Etsy said it was unable to provide those numbers due to, “the difficulty of estimating certain items that are excluded from non-GAAP adjusted EBITDA margin, including interest expense, net, provision for income taxes, depreciation and amortization, stock-based compensation expense, net unrealized loss on warrant and other liabilities, foreign exchange loss, other non-operating expense, net, contributions to Etsy.org and acquisition-related expenses, the effect of which may be significant.”

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Target is winning back shoppers, especially online

BY Gina Acosta

Brian Cornell says Target's fifth consecutive quarter of traffic growth is evidence that the retailer is making good progress on itsomnichannel capacity improvements.

For the fourth quarter ended Jan. 30, same-store sales at Target increased 1.9%, driven by traffic growth of 1.3%. This is Target's sixth consecutive quarter of rising same store sales.

“With traffic growing and our signature categories leading our growth, Target’s results demonstrate that we are focused on the right strategic priorities,” said Cornell, chairman and CEO of Target. “I want to thank our teams across the company for giving our guests a great holiday season, driving consistent growth throughout the fourth quarter and delivering on the sales and profit goals we laid out at the beginning of the year. While we have made a great deal of progress in 2015, we are excited about the opportunity in front of us to provide a more seamless experience and accelerate profitable growth.”

The retailer said sales in the Style, Baby, Kids and Wellness categories grew more than three times faster than the company average. But the big story in Target's results was the 34% jump in online sales.Target offered free shipping on all online orders for the holiday season for the second straight year.

“A key takeaway from Target’s Q4 results in our view is the performance of its online business, which grew 34% year-over-year, and will likely lead the ‘brick-and-mortar' pack on a percentage growth basis for the period,” stated Moody’s lead retail analyst Charlie O’Shea.“As we saw throughout retail this holiday, promotions were impactful overall, with Target’s gross margin feeling the heat as it was down 60 bps year-over-year, however the company was able to more than make up for this drop with solid control of operating expenses. Going forward, we believe Target’s continuing efforts to strengthen its food business will resonate with consumers, and drive increased traffic through more frequent shopping visits.”

Earlier this week Walmart reported a 0.6% increase in same-store sales and e-commerce growth of only 8%, raising questions about how well it is fighting back at Target and Amazon.

For the quarter, Target reported a profit of $1.43 billion, or $2.32 a share, up from a loss of $2.64 billion, or $4.10 a share, a year earlier. This includes the gain stemming from the sale of its pharmacy and clinic businesses.Revenue was $21.63 billion.

For the full year, Target’s same-store sales grew 2.1%, traffic increased 1.3% and adjusted EPS increased 11.3% to $4.69. Target returned $4.8 billion to shareholders in 2015 through dividends and share repurchases.

Minneapolis-based Target Corp. operates 1,792 stores and at Target.com.

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