(Adds analyst and executive comment, background)
By Jeffrey Dastin
May 2 Etsy Inc, an e-commerce site for
handmade goods, on Tuesday said its chief executive would step
down as it reported first-quarter profit below expectations and
faced investor pressure to change course.
Shares nosedived 17 percent in after-hours trading.
Etsy said Chief Executive Chad Dickerson, who shepherded the
company through its initial public offering two years ago, would
be replaced by board member and former eBay Inc
executive Josh Silverman this week.
The company also said it would cut about 80 jobs, or 8
percent of its workforce.
While Etsy continues to ride the wave of commerce shifting
online, growth has slowed of gross merchandise sales, the value
of items sold on its site and a key metric. Amazon.com Inc
has opened a marketplace for handmade goods, too,
though Etsy has claimed its wider selection of artisanal goods
is keeping the e-commerce juggernaut at bay.
Etsy said it failed to sell to as many visitors to its
website as anticipated in the first quarter. Revenue of $96.9
million, up 18 percent from the year prior, came in below the
$98.4 million analysts were expecting on average, according to
Thomson Reuters I/B/E/S.
Etsy cited slower consumer spending growth, but said its
analysis of why February sales were soft was not yet complete.
The company said it was not offering a routine financial
forecast this week because of the management transition.
"That’s creating a level of uncertainly that the market’s
uncomfortable with," said Maxim Group analyst Tom Forte.
Costs jumped as a percentage of revenue due to a brand
campaign and higher employee expenses, Etsy said.
Incoming chief Silverman said on a call with analysts that
marketing would continue to be an important investment going
Including $2.1 million in interest expense and other
non-cash charges associated with Etsy's new headquarters, the
company lost $421,000 in the first quarter after earning $1.2
million a year prior. Analysts on average had expected earnings
per share of 1 cent.
Etsy said long-time director Fred Wilson will take over the
board's chairmanship from Dickerson. One of the company's
shareholders, black-and-white capital LP, earlier on Tuesday
called on Etsy to explore a sale and to separate the roles of
chairman and CEO.
Among other criticisms by black-and-white, which said it
owns 2 percent of Etsy, is that the website's search
functionality is poor. Etsy said on Tuesday it is working to
(Reporting by Jeffrey Dastin in San Francisco; Editing by James
Dalgleish and Leslie Adler)