Watch CNBC's full interview with Poshmark CEO Manish Chandra

Summary

Poshmark's shares have dropped over 20% following a wider-than-expected net loss for Q1 despite strong sales. CEO Manish Chandra discusses the company's focus on long-term profitability through international expansion, category diversification, and technological innovation. The reopening has boosted consumer engagement, with significant sales increases. Chandra highlights the benefits of resale in hedging against inflation and supply chain issues, emphasizing its appeal to both consumers and brands. He also addresses market misunderstandings about Poshmark's asset-light model and notes successful international efforts, particularly in Australia.

Takeaways

• 📉 Poshmark's stock is down by more than 20% after reporting wider net losses for the first quarter, despite strong sales growth.
• 🎯 CEO Manish Chandra emphasizes the company's focus on operating profitability and maintaining a $4.2 billion run rate with 5% adjusted profitability.
• 🌐 Poshmark is pursuing long-term strategies that include international expansion, category expansion, and continued investment in technology and product innovation, such as the launch of video on the platform.
• 📈 The company has seen impressive sales growth, with a slight miss on guidance, and there is a positive outlook on consumer momentum as the economy reopens.
• 👗 Poshmark has over 4.5 million sellers and offers more than 150 million items, indicating a robust marketplace for fashion that benefits from both online and offline activities.
• 💸 Resale is presented as a hedge against fluctuating prices and inflation, as items in one's closet appreciate in value over time.
• 🔄 The resale market is not just a trend but a sustainable practice that benefits consumers' wallets and the economy, as noted by the CEO.
• 👕 There has been a significant increase in sales of certain items like dresses and jeans, suggesting a strong consumer interest in fashion as social activities resume.
• 💡 Poshmark believes that the market understands only half of its story, particularly the resale aspect, but may be misunderstanding the company's growth margins and profitability.
• 🌍 International expansion is a key priority for Poshmark, with Australia being a successful test case, launched during the COVID pandemic without the need for an on-the-ground team.
• 🚀 The company's asset-light model allows for rapid and efficient expansion into new countries, showcasing the scalability of Poshmark's business approach.

Q & A

Why are shares of Poshmark plunging despite strong sales?

Shares of Poshmark are plunging due to wider than expected net losses for the first quarter, which has led to more scrutiny on high-growth companies like Poshmark.

What was Poshmark's brief period of profitability during the pandemic, and how does it compare to the current situation?

Poshmark experienced a period of profitability during the COVID pandemic, but the current wider losses indicate a change in financial performance, prompting concerns about the company's path to long-term profitability.

What is Poshmark's focus in terms of financial goals?

Poshmark is focused on operating profitability and aims to stay at $4.2 billion with 5% adjusted profitability.

What are the long-term strategies Poshmark is focusing on to ensure growth and profitability?

Poshmark's long-term strategies include expanding internationally, broadening categories, and continuing to focus on technology and product innovation, such as the launch of video on the platform in the last quarter.

How does Poshmark view the current consumer momentum as we enter the reopening period?

Poshmark is excited about the reopening as it provides more occasions for fashion and a social marketplace, with over 4.5 million sellers and more than 150 million items, indicating a positive outlook on buying and selling.

What was the impact of the reopening on Poshmark's sales in March?

In March, Poshmark saw sales increase significantly, with overall sales cropping up over 100% and jeans sales jumping over 85%.

How does Manish Chandra view the role of resale in the current economic climate?

Manish Chandra believes that resale offers a hedge against fluctuating prices and inflation, as items in one's closet appreciate over time, and it is not subject to supply chain issues.

What is the current trend in the resale market, especially among the younger Gen-Z generation?

The interest in resale is continuing to grow, not just among Gen-Z but also as brands jump into the game, indicating that resale is a trend that is here to stay and is beneficial for the wallet and the economy.

How does Poshmark differentiate itself from other high-asset models in the market?

Poshmark differentiates itself by focusing on a social marketplace model, which is different from the high-asset models with processing costs and asset-like bundles of companies like Etsy, Amazon, and Facebook.

What is Poshmark's stance on the market's understanding of its business model?

Poshmark believes that the market understands half of its story, which is about resale, but there is a misunderstanding of the second half, which includes growth margins, adjusted profitability, and free cash flow.

Can you provide an update on Poshmark's international expansion, specifically in Australia?

Australia has been successfully launched during the COVID timeframe, and the process was efficient, indicating the ease and speed at which Poshmark can expand into new countries.