Ebay Warns Of Weak Holiday Sales

eBay Inc (EBAY) forecasted dim sales for the holiday season due to US economic environment along with consumer confidence that has lessened due to shut down, says Reuters. According to Bob Swan, chief financial officer of eBay, ecommerce industry growth rate has come down to around 13 percent in the third quarter compared to 16 percent in the prior quarter.

“We really haven’t seen any more positive signs in October,” he added.

This holiday season to be weakest since 2009

Another probable shutdown in America cannot be ignored even though US senate leaders have agreed upon reopening the government and tackle the government debt default. However, if they do so then also the funding would only be enough to run the government till January 15.

According to eBay chief executive John Donahoe, nothing can be assured until another week from now, and he is hoping the deal to be successful.

This holiday season is expected to be the grimmest in sales growth since 2009, according to data firm Shopper Trak. Further, the September retail sales data indicated the lack of confidence amongst the US shoppers due to weak second quarter for many retailers.

A report from Conference Board shows that confidence of consumers in the last month has come down and is touching the lowest since May.

Grim outlook

For the fourth quarter, eBay is projecting revenue in the range of $4.5 billion and $4.6 billion compared with the $4.64 billion estimated by analysts. Profit for the quarter is expected to be 79 cents to 81 cents a share, while Wall Street analysts estimate 83 cents. CFO Swan said that revenue and profits for the fourth quarter will come in at the low end of eBay’s forecast.

In the third quarter, the online retailer posted net income of $689 million, or 53 cents per share, which is an increase from $597 million or 45 cents per share in the previous year. eBay’s earnings came in at 64 cents after excluding the benefit of its sales of stakes in e-commerce companies RueLaLa and ShopRunner.

eBay has rebounded after Donaoe focused on mobile shoppers, gaining international traction by collaborating with local physical stores. Gross merchandise volume of the company increased 12.7 percent to $18.4 billion in the United States, excluding auto sales. Additionally, eBay saw an increase in its third quarter profit due to its online payment business. PayPal as consumers increasingly did their transaction through PayPal.