E-commerce site Etsy had to cut its workforce by 8% and fired its CEO, Chad Dickerson, after failing to hit its first quarter revenue targets.
The statement on the first quarter earnings reported revenues of $96.9 million, just below the projected earnings of $98.4 million. A slowdown in consumer spending in February apparently dragged down the numbers, resulting in zero earnings per share for the first three months of 2017, which was below the 1% forecast.
Etsy tanks after announcing a new CEO, flat earnings, and job cuts https://t.co/XnClIwewfF pic.twitter.com/r37Awwe1U3
— BI Finance (@clusterstock) May 3, 2017
In the same release, Dickerson expressed optimism for the strong business model of Etsy, which he believes will pull it through the challenging times and “drive long-term growth for all stakeholders.”
Dickerson, however, won’t get the opportunity to steer the company in the right direction as he was replaced by Josh Silverman, a former executive at eBay. John Allspaw, the chief technology officer, also left the company while 80 workers have been laid off in the company’s effort to streamline its personnel.
Silverman won’t be coming in blind, as he’s familiar with what ails the company, being a member of the Board of Directors since November 2016. Dickerson will also remain as an adviser until the end of this month.
Fred Wilson, who was named as the new chairperson of the Board of Directors, said appointing Silverman as the new CEO will make for an easy transition with the exit of Dickerson.
The company did not provide details on why spending in February was down. The press should also not expect a financial forecast anytime soon due to the change in management. Etsy reported losses of $421,000 in the first three months of this year against a $1.2 million earning for the same period last year.
Maxim Group analyst, Tom Forte, said Etsy’s decision to be cautious is “creating a level of uncertainty that the market’s uncomfortable with.” The CEO’s exit dragged down shares by 17% at closing.
Another issue pointed out is the poor web infrastructure of Etsy, which made it difficult for consumers to maximize its local search engine. This concern was aired by black-and-white art, which claims to own 2% of the e-commerce site.
The company said that as early as February, they have already instituted some measures to streamline their cost structure, while also looking for other ways to boost efficiency. “As a result of this process, we have identified savings that will be realized through a combination of headcount reductions and a reduction in internal program expenses,” the statement explained.
