eBay's Emphasis On Luxury And Refurbished Goods Generates Results

On Wednesday, EBay Inc's quarterly results exceeded Wall Street expectations as inflation-conscious buyers scooped up reconditioned goods and the ecommerce company reaped the rewards of expanding its premium offers.

The company's holiday-quarter sales is still expected to be somewhat lower than expected, but investors ignored that to propel its stock up over 8% in extended trading.

"As consumers in our major markets face continuing inflation, higher mortgage rates, and rising home energy expenses," eBay Chief Executive Jamie Iannone told analysts.

Ebay has expanded its platform's categories to include pre-owned sneakers and jewellery as it seeks to capitalise on the consistent demand from dedicated collectors of high-value keepsakes such as electronics, trading cards, and watches.

Despite this, executives cautioned of risks such as a strong US dollar, Europe's increasing energy crisis, and low consumer confidence ahead of the holiday shopping season.

However, they claim that the energy crisis has increased demand for home energy goods in Germany due to rising utility prices and uncertainty about energy availability.

"EBay still faces risk from their 'enthusiast' buyer base cutting back on spending in their top categories, and eBay retains significant foreign exposure... "However, eBay has just set a considerably lower standard and already trades at a significant discount," said Benchmark analyst Daniel Kurnos.

This year, the company's stock has dropped by around 40%.

According to Refinitiv statistics, the midpoint of eBay's holiday-quarter sales prediction of $2.42 billion to $2.50 billion fell slightly short of analysts' forecasts of $2.49 billion. Its modified profit expectation was comparable.

Retail industry predictor Amazon.com Inc had also predicted a bleak holiday season, owing to this year's rise in food, gas, and other essentials prices, which prompted cash-strapped shoppers to put casual shopping on the back burner.

Revenue dipped 5% to $2.4 billion in the third quarter, but it above expectations of $2.32 billion. The adjusted earnings per share of $1 was 7 cents higher than expected.

(source : reuters)