Good morning, CFOs. Wayfair CFO Kate Gulliver on signs of a rebound in the U.S.; Elon Musk outlined ambitious targets for SpaceX following its first-ever earnings report; Procter & Gamble will buy supplement company Thorne; plus, Portillo's hires new CFO.
Furniture and home improvement companies often offer good indicators for how the U.S. economy is performing, as those businesses reflect the sentiment of consumers and key discretionary spending behavior for items such as sofas, tables and decor.
For furniture company Wayfair , recent data show signs of a rebound, after a long stretch of slow growth following the Covid-19 pandemic, our Wall Street Journal colleague Katherine Hamilton reports. Wayfair's sequential sales growth in the latest period made this the best second quarter since 2020, Katherine writes.
Looking abroad, Wayfair's international business hasn't had quite the same turnaround as the U.S., as sales fell 1.3%, according to its CFO.
Key quote: "That macro improvement did not extend to our end markets in Canada or the U.K., which both saw continued pressure on consumer sentiment and discretionary spending," Chief Financial Officer Kate Gulliver said.
We checked in with Katherine for this latest snapshot of Wayfair's earnings -- and what big-ticket purchases may mean for U.S. consumers:
What are some of the factors driving Wayfair's growth and rebound?
Wayfair's U.S. business is the main driver of its turnaround. The company had a big spike in demand around the Covid-19 pandemic when everyone was inside and a lot of Americans were buying homes. In more recent years, the housing market has slowed down, and taken Wayfair's demand with it.
The biggest driving factor that Wayfair discussed was growth in its luxury furniture brands. That suggests that, while low- and middle-income Americans might still be feeling pressured, high earners are ramping up their spending enough to buoy the whole business.
Their CEO mentioned how they are operating during the K-shaped recovery. What struck you about their strategy to address this two-track economy?
One of the most striking details from Wayfair's latest quarter is just how much more profitable its luxury brands can be compared with its core e-commerce platform. The average customer for Wayfair's luxury brand Perigold spends three times more per year than the average Wayfair.com shopper, according to CEO Niraj Shah.
The luxury brands also bring in an entirely new customer than the core business. Shah said about 40% of Perigold customers each year are new to Wayfair, and it is usually someone who is more affluent and resilient to economic downturns. That means Wayfair has the opportunity to attract a whole new group of consumers who will spend more and be more consistent with demand.
Wayfair's CFO also mentioned their presence in Canada and the U.K. Where do they see the greatest opportunities, or risks, internationally?
Internationally, Wayfair isn't seeing the same level of recovery as it saw in the U.S. Customers in Canada and the U.K. are still feeling financially squeezed, which means they are less likely to buy nonessentials like furniture and decor. International sales were down 1.3% in the latest quarter, compared with a 9% gain in the U.S.
The Day Ahead
📆 Earnings
-- Allstate -- CVS Health -- DoorDash -- eBay -- Eli Lilly -- Expedia Group -- Honeywell Aerospace -- Kraft Heinz -- Motorola Solutions -- Novo Nordisk -- Occidental Petroleum -- Phillips 66 -- Shopify -- Uber Technologies -- Walt Disney
📈 Economic Indicators
The ISM releases its Services PMI for July.
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What Else Matters to CFOs
Elon Musk on Tuesday outlined ambitious targets for SpaceX , including launching data centers in space in 2027 and reaching $1 trillion in revenue, as part of his first address to investors since the company's initial public offering.
The statement from the billionaire entrepreneur and SpaceX chief executive followed an earnings report that showed sharp growth in revenue across its three business lines: space, connectivity and artificial intelligence. Revenue for the world's biggest rocket launcher and satellite-internet provider in the second quarter totaled $7.8 billion, up 92% from the same period last year.
-- SpaceX Says Spending Spree Is Supercharging AI Revenues -- Heard on the Street: SpaceX Needs to Make Its Bigger Rockets Work -- SpaceX Stock Slides After Earnings
Procter & Gamble will buy supplement company Thorne for $3.8 billion, bolstering the consumer giant's presence in the beauty and wellness industry.
The deal will help the company build its portfolio in an area where it feels demographics are on its side, P&G's Chief Executive Shailesh Jejurikar said on CNBC Tuesday.
"For growth, definitely one of the areas we're looking at is a much bigger play in growing our beauty and health business," he said.
📰 Other headlines
-- Antitrust Trial Over Paramount-Warner Merger Set for March
-- Officials Probe Salmonella Cases Tied to Jalapeño Peppers Served at
Chipotle
-- U.S. Trade Deficit Contracted in June
-- How Trump's Financial Windfall Stiffened Opposition to Landmark Crypto
Bill
-- The Investing Heavyweights That Backed Situational Awareness Before It
Blew Up
-- Bankers Are Betting on Supersize Bonuses This Year With Profits Surging
-- Disney to Sell Its Stake in A+E Global Media to Hearst for About $1.2
Billion
-- How Protected Is Your Job If You Go on Leave? Not as Much as You Think
-- New Jersey Sues Amazon, Alleging Delivery Network Illegally Suppresses
Wages
-- The Live Shopping App Where Some People Bid Until They're Broke
📈 Earnings wrap-up
-- McDonald's Aims to Improve Service and Food, and Chose a New U.S. Boss to
Help
-- Caterpillar Says the AI Boom Continues to Drive Construction Demand
For more earnings news, click here.
The Big Number
Estimated price tag for a superyacht, replete with a glass-bottomed swimming pool and helipad, for billionaire Revolut CEO Nik Storonsky, founder of one of the world's most valuable startups. Yacht broker Cecil Wright & Partners is suing Storonsky over that purchase for not paying the broker's fee.
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CFO Moves
Portillo's, the Oak Brook, Ill.-based company, said it has hired Kevin Kalicak as the fast-casual restaurant chain's new chief financial officer and treasurer, effective Sept. 7. Portillo's on Tuesday said Kalicak, 53 years old, most recently served as senior vice president of finance for Darden Restaurants' Olive Garden chain. Kalicak will receive a base salary of $500,000 and an annual bonus with a target of 75% of his base pay. Michelle Hook, who had been Portillo's finance chief since 2020, left the company in May to take the same post at Shake Shack.
-- Colin Kellaher contributed to today's Ledger.
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