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Shopify Shares Surge 17.8%
Pitney Bowes Sells Controlling Stake in Global Ecommerce
Macy’s Store Closures to Reshape U.S. Malls
Yelp Show Resilience Amid Digital Transformation
Consumer Spending Slows Across Sectors
Turkey Introduces Tough Tax Measures
ECOMMERCE STOCKS
Shopify Shares Surge 17.8% Following Strong Q2 Earnings Beat
Shopify’s stock surged 17.8% on Wednesday after the Canadian e-commerce giant reported better-than-expected second-quarter results, citing robust demand despite a challenging consumer spending environment.
Here’s how Shopify performed versus Wall Street expectations, based on a survey by LSEG:
Earnings per share: 26 cents vs. 20 cents expected
Revenue: $2.05 billion vs. $2.01 billion expected
The company also reported a significant 22% increase in gross merchandise volume (GMV) to $67.2 billion, surpassing the consensus estimate of $65.8 billion according to FactSet.
Shopify, which provides software and services for online merchants, including advertising and payment processing tools, continues to gain market share. CFO Jeff Hoffmeister noted that Shopify is “taking share” even as consumer spending remains volatile amid economic uncertainty.
This earnings report follows cautious statements from rivals such as Amazon, Etsy, and Wayfair, which have highlighted consumer frugality and a trend toward cheaper brands. However, Shopify executives emphasized that their diverse merchant base has helped them outperform in this environment.
Looking ahead, Shopify expects third-quarter revenue to grow at a low-to-mid-20s percentage rate year-over-year. FactSet analysts project 21% growth to $2.07 billion.
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ECOMMERCE MARKET
Pitney Bowes Sells Controlling Stake in Global Ecommerce to Hilco Global
Pitney Bowes has sold a controlling stake in its U.S.-based Global Ecommerce (GEC) segment to Hilco Commercial Industrial, a Hilco Global affiliate, which will wind down the business. The move aims to eliminate nearly all of the $136 million in losses GEC incurred in 2023.
This decision follows the company’s recent leadership transition, with Lance Rosenzweig appointed as interim CEO. Pitney Bowes is focused on streamlining operations and prioritizing its core, revenue-generating segments: SendTech, Presort, and Financial Services.
“We committed to a swift and comprehensive review of alternatives for GEC,” Rosenzweig said. “We are pleased to have fulfilled that commitment by identifying an orderly exit path that will maximize value for shareholders.”
Two GEC entities filed for Chapter 11 bankruptcy and are expected to be wound down by early 2025, pending court approvals. This sale allows Pitney Bowes to concentrate on its core businesses without disrupting service to customers, partners, and vendors.
In its second-quarter earnings, the company reported a reduction in net loss from $142 million to $25 million, reflecting its commitment to becoming a more efficient enterprise.
ECOMMERCE RETAIL
Macy’s Store Closures to Reshape U.S. Malls
Macy’s decision to close nearly a third of its stores will have significant effects on malls and communities across the U.S. The retailer plans to shut down about 150 locations by early 2027, impacting 25% of its gross square footage but less than 10% of its sales.
While Macy’s shifts focus to its remaining 350 stores and upscale brands like Bloomingdale’s, the closures are expected to accelerate the decline of struggling malls, many of which are already losing relevance due to the rise of online shopping.
Healthier malls may benefit from these closures, as they free up valuable real estate for more innovative uses, such as grocery stores, entertainment centers, or healthcare facilities. Examples include San Francisco’s Stonestown Galleria, where a former Macy’s has been transformed into a Whole Foods and a movie theater.
However, some malls may not survive Macy’s exit, potentially leaving behind vacant, deteriorating spaces. The future of American malls will likely see a shift toward more diverse tenants and creative repurposing, reflecting broader changes in retail and consumer preferences.
ECOMMERCE TECH
Yelp’s Earnings Show Resilience Amid Digital Transformation
Yelp, the platform that helped define online business reviews, continues to be a significant player in today’s digital landscape. For Q2 2024, Yelp reported a 6% year-over-year increase in net revenue, reaching $357 million, while net income surged 158% to $38 million, reflecting an 11% profit margin.
CEO Jeremy Stoppelman highlighted the company’s success, particularly in home services, which grew by 15% and its self-serve channel, which saw a 20% revenue increase. Despite these gains, Yelp revised its full-year 2024 guidance, lowering it to between $1.410 billion and $1.425 billion, citing challenges in the restaurant and retail sectors due to economic uncertainties.
Yelp is adapting to these shifts by leaning into artificial intelligence (AI) advancements, including AI-powered search tools that enhance user experience and drive more leads to service providers. Despite a 6% decline in paying advertising locations, ad clicks rose by 9%, thanks to improvements in advertising technology.
Yelp’s strategic focus on innovation and digital transformation positions it well in a competitive market, even as economic pressures continue to challenge traditional sectors like restaurants and retail.
ECOMMERCE NEWS
Consumer Spending Slows Across Sectors
Consumers are showing increasing hesitation in spending, even on everyday items, leading to slowdowns in various industries. While resilience remains, it’s starting to wane in key areas.
Earlier this year, over 61% of consumers reported cutting back on their purchases, and more recent data shows retail sales flatlining in June, with big-ticket items particularly affected. Even Amazon has felt the impact of consumer cutbacks.
The home furnishings sector is among the hardest hit. Wayfair reported a 1.7% drop in total revenue, with U.S. sales down 2%. CEO Niraj Shah noted that spending in this category is declining at levels comparable to the Great Financial Crisis.
Travel-related businesses are also seeing a slowdown. Disney reported a modest 2% revenue increase in its Parks division, while Airbnb observed shorter booking lead times, indicating consumer uncertainty.
Even smaller purchases aren’t immune. Starbucks saw a 6% drop in U.S. store traffic, with CEO Laxman Narasimhan attributing the decline to a challenging consumer environment.
Additionally, consumer borrowing rose less than expected in June, pointing to a reluctance to use credit cards and a focus on paying down debt.
ECOMMERCE CROSS-BORDER
Turkey Introduces Tough Tax Measures on Foreign Ecommerce
Turkey is enacting stringent tax reforms to curb consumer orders from foreign online stores. Import duties will increase sharply, and the tax exemption threshold will drop significantly. Additionally, an extra 20% tax will be imposed on luxury items.
Effective August 21, import duties on European packages will rise to 30%, up from 18%, while packages from outside the EU will see duties double to 60%. The exemption threshold for taxes will decrease from €150 to €30, meaning more small international orders will now be taxed, driving up costs for Turkish consumers and boosting domestic online spending.
These changes come as Turkey’s ecommerce sector grows rapidly, with online spending more than doubling last year. Nearly 560,000 companies are now active in the sector. The government aims to protect these businesses from increasing competition from foreign retailers.
The measures follow hints from Turkey’s Trade Minister about regulating platforms like Temu and AliExpress, in line with the European Union’s plan to eliminate import duty exemptions for packages under €150 by March 2028.
Signing off,
The Merchant @CartHustle