Ebay CEO sees benefits from spending slowdown
Even though eBay and Wal-Mart customers overlap, Meg Whitman says eBay's business thrives during bouts of spending malaise.
NEW YORK (CNNMoney.com) -- Even though Wal-Mart and eBay share much of the same customer base, eBay CEO Meg Whitman said Wednesday that she's not worried that record-high gas prices and the housing slump pose any significant threats to the company's business.
"Historically, eBay and Wal-Mart have a common customer base. But eBay does better when customer spending retreats," Whitman told a gathering of analysts at the Goldman Sachs 8th Annual Global Internet Conference in Las Vegas.
That's certainly not the case with Wal-Mart (Charts, Fortune 500). In fact, the world's largest retailer warned earlier this month that it expects sales to suffer in the coming months as its mostly low-income shoppers struggle with higher prices at the pump and less money to spend in its stores.
But Whitman pointed out that eBay's business tends to run "counter-cyclical to macro-economic trends."
"One of core value propositions is value. So our customers are just as happy looking [to buy] last year's digital camera at a lower price," she said."We haven't seen any pullback from our customers. I think we may actually benefit from a spending softness," she added.
Additionally, eBay's (Charts, Fortune 500) Chief Financial Officer Bob Swan, echoing Whitman's optimism, reiterated the company's long-term target of growing annual operating margins of 35 percent or higher.
Despite the somewhat cheery outlook from both executives in light of a 52 percent profit surge in its recently completed first-quarter, analysts have criticized eBay for the mediocre two percent growth in new U.S. listings during the period and the ongoing weakness in eBay's German market.
Whitman addressed both issues.
"Our first priority is to accelerate our gross merchandise volume (GMV) growth in the U.S. and in Germany. We get that," she said. Without divulging any more details, Whitman promised that customers would see "changes in the core eBay experience" in the next 12 months.
Swan pointed to both its online payment system PayPal and its Skype Internet-based phone service as core growth drivers for eBay.
He also dismissed suggestions about eBay potentially spinning off its PayPal division.
"We will expand PayPal on eBay. We're going to grow it on Skype and we'll continue to optimize the three businesses as a whole," he said.