March 10th, 2025: Target 2024 earnings shows company falling behind, when will merchants stop treating data as a project? Commercetools layoffs throws into question IPO plans, has Shopify Enterprise
In the past two weeks, Commercetools has laid off over 10% of its employees and is refocusing its goto-market strategy on the Enterprise sector. Personally I think this puts their IPO plans on the shelf for some time especially when you consider the fact that the company does not currently have a CFO. You’ll find this and other stories about Shopify, Target, and Data Strategy on this week’s Watson Weekly, sponsored by Mirakl, available wherever you find your podcast.
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Today’s episode of The Watson Weekly Podcast is sponsored by Mirakl, the catalyst of commerce. We all know that eCommerce is changing at breakneck speed. But, if you’re still playing by the rules of retail’s past, you’re leaving money on the table. And a lot of it. Mirakl empowers 450 retailers to successfully flip the script and transform their businesses, by creating a flywheel of AI-powered marketplace and retail media solutions. What’s stopping you from joining this retail revolution?
It’s March 10, 2025 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Target 2024 Earnings Shows Company Falling Behind
When Will Merchants Stop Treating Data as a Project?
Commercetools Layoffs Throws into Question IPO Plans
Has Shopify Enterprise Turned a Corner?
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
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BUT FIRST in our shopping cart full of news….
Target 2024 Earnings Shows Company Falling Behind
Target's earnings were better than I expected overall, but the growth was still behind their peers. In contrast to huge operating income growth at Walmart and Amazon, Target's operating income declined year over year.
Also, asking for a friend -- where the hell is the Target CMO? Waiting for a hire there.
A few Q4 highlights illustrate the challenge Target is up against:
* Comparable sales growth of 1.5% (across digital/physical)
* eCommerce growth of 8.7%
* Operating income declined 24%
Compare these stats to Walmart in Q4:
* Comp sales growth of 4.6%
* eCommerce growth of 20%
* Operating income growth of 8.3%
Essentially, Target is losing more money year over year, and is growing slower than its larger peers. Not a recipe for breakout success.
If this is the Tarzhay magic, then the magician perhaps has lost his magic hat, as well as any rabbits to pull out of it.
Still, someone at the company must have heard me:
* Target Plus is mentioned as a key priority which is planned to grow from $1B to $5B by 2030.
* Target's ad business plans to double by 2030 to $4B from its current $2B.
How about tariffs?
* The company explains this is contributing to consumer uncertainty and this leading to meaningful profit pressure in the first quarter of the year.
This could be a warning sign to other retailers, especially those without as much buying power as Target.
[References:]
Our Second Story
When Will Merchants Stop Treating Data as a Project
I speak with a lot of companies on a day to day basis, and one of the most frustrating elements I see in the execution plans of large enterprises is their data strategy. It still seems to me that I see so many technologists and system integrators and even merchant teams speaking about composability.
However in my opinion, it seems like Large Retailers Need Less Composability and More Connectivity
Many focus on what solutions they need to compose together, and very little attention to their workflow.
Where data starts, how it combines and flows through the systems, and are these systems connected together? Usually the places where Excel lives, those are the breakdowns.
Stop me if you've heard this before: the systems you should be using for planning and analysis, have:
* The systems who have the right data are not connected
* Or the data appears, but it is too late
* The wrong level of aggregation of the data
* With questionable accuracy, and
* no way to remove exceptions or anomalies
The system integrators are helping you process transactions, but that is usually the bare minimum. The data you need to analyze and make decisions about the business are usually at another level of difficulty.
Meanwhile, your data analysts don't know the business well enough to deliver the right data to business owners. I find the most common problem here is simple:
Data is treated like a one-time project, and not a continuous improvement process. As a result, once the project is over, the business teams are left to fend for themselves. Data is like your child as they grow up, as you get more experienced you start asking more complex questions. If there is not a data team there to support you improving the number of data sources, their reliability and how they are used.
This generally means analysts embedded within the business teams there to help enable the improvement needed to get the business where it needs to go.
[References:]
Our Third Story
Commercetools Layoffs Throws into Question IPO Plans
It's never fun speaking about layoffs, but this is part of what's going on in the commerce world as well. I'm not an insider anywhere - on purpose, just someone who tries to pay attention.
What happened - this was reported by TechCrunch according to a verified internal memo:
* commercetools laid off ~10% of its staff
* Restructured its management team, including departures of the CFO, CRO.
* Marketing realigned to focus on Enterprise.
The CEO, also gave a few choice words, which hard to say if they were taken out of context:
* "We had really ambitious goals that we had not reset to reflect the macro-economic uncertainty" .. and .. "cited question marks over how tariffs would play out as another factor impacting e-commerce companies, and the knock-on effect that has on suppliers like Commercetools."
I don't love these words from the CEO, even a new CEO who likely had not much responsibility for past performance. The buck stops here, and these words passed the buck down the street.
How about: "We aren't growing fast enough and some of our expansion areas into new markets haven't panned out - instead we are reorienting towards our strengths". Which.. he did say some of this, but the reason why is the part I didn't love.
My read is clear:
* There will be no IPO in the next couple of years (ever? hard to say), unless something significant changes. The CFO who came on over a year ago was widely believed to have done so in order to help take the company public. Now the company has no CFO at all.
* commeretools mid-market activities, which to my read (and likely the company's) have not been extremely effective - are likely ceasing... commercetools is viewed in an Enterprise light and the company does not have the ability to change that perception/reality anytime soon.
* I do still expect further expansion beyond Retail into the other verticals they have already been targeting.
* Employee attrition has also happened. In the past year or so, Shopify has notably picked up some commercetools sales executives as it continues to move up-market. And it goes without saying that my friend Kelly - in many ways one of the most visible public faces of commercetools - departed early this year.
Probably not just employee attrition. Customers too? Speculation. Speaking about headless for a moment, some retailers during COVID got caught up in an infrastructure they could not easily support (not that it is unsupportable in practice, but it is also easy to screw up by the wrong implementor) -- and some retailers have migrated away from it. I would not be surprised if some of the "growth" issues have an attrition element to them too.
All told, no IPO soon. and until growth rebounds, maybe never. And so the IPO market turns. Shipbob and Klarna on deck? Bueller?
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_commercetools-layoffs-likely-signal-ipo-plans-activity-7301220852698697728-Za6d/?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAABzTYBMEkpgbpDWbI9miv0bkNA3W2mE1I
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And Our Last Story
Has Shopify Enterprise Turned a Corner?
Shopify CFO Jeff Hoffmeister recently sat down at a Morgan Stanley Investor Day to speak about a range of topics, but inevitable the talk turned to Enterprise. Here are a few tidbits I took out of the talk.
First, Shopify seems passed its initial investment up the Enterprise learning curve. The CFO revealed that it takes about 9 months to close an Enterprise deal and about 9 months to implement software. So that’s 18 months. When you consider the fact that Bobby Morrison was hired 30 months ago today in August of 2022, let’s maybe subtract 6 months from that to allow for the fact that he is building a team from scratch. We are talking about a 24 month period the company has been in the market.
When you compare that to 18 months to sign a launch a new customer from scratch, it appears to me that Shopify is right on target in its ability to onboard new Enterprise merchants.
Second, the Morgan Stanley questioner pointed out that most of Shopify’s legacy competition like Salesforce and Adobe are long in the tooth. And that Shopify is anything but that.
This certainly provides a tailwind to Shopify’s business.
Finally, the question is going to be simple going forward. Can Shopify Enterprise grow fast enough to justify continued investment relative to other opportunities?
Shopify is quick to point out B2B, POS, Europe and other opportunities that are growing faster than Shopify’s core business, which itself is growing twice as fast as the rate of eCommerce.
Shopify is not revealing how fast that Enterprise GMV is growing, and there may be some reason for that — the rest of the business is outpacing it. In fact, it is possible that Shopify Enterprise will forever be the least productive part of the Shopify growth machine.
Is that a long-term liability for the Enterprise team?
[References:]
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Blue Pool Capital Acquires 12% Stake in Golden Goose
Blue Pool Capital, backed by Alibaba co-founder Joe Tsai, has acquired a 12% minority stake in luxury Italian sneaker and apparel brand Golden Goose for an undisclosed amount. Permira will retain a majority shareholding in Golden Goose. Blue Pool Capital will help Golden Goose grow in the Asia Pacific market and provide expertise in the sports, entertainment, and consumer industries. Golden Goose postponed its initial public offering in Milan in June 2024, and this deal was negotiated and agreed upon shortly after its IPO postponement.
Second
Tusk Logistics Secures $2M In Seed Funding To Launch Alternative Carrier Management Platform
Tusk Logistics, a nationwide network of regional parcel carriers, has announced that it has raised $2 million in seed funding and has unveiled its new operations platform. Tusk Logistics offers shippers access to improved margins without the need for national carriers such as UPS, USPS, and FedEx. Aggregating a sector dominated by fragmentation and inefficiencies enables shippers to access a new cost-effective solution without the manual overhead of working with multiple regional carriers.
Third
MarketLeap Raises $8M Series A Round
MarketLeap, an AI-driven platform that helps direct-to-consumer (D2C) brands sell on global marketplaces, has raised $8 million in Series A funding that will be used to hire talent, invest in its platform, and further expand in the US. Interesting to note that the founding team are ex-Amazon employees who saw sellers' challenges when going to new international markets. Helping D2C businesses go international via marketplaces sounds contrarian.
Fourth
Tapestry To Sell Stuart Weitzman To Caleres For $105M In Cash
Tapestry, a multinational fashion platform, announced that it will sell Stuart Weitzman footwear brand to Caleres, a portfolio of consumer footwear brands, for $105 million. Selling Stuart Weitzman enables Tapestry to focus on growth for Coach while reinvigorating sales at Kate Spade after Stuart Weitzman struggled due to weak luxury spending in North America and China. Stuart Weitzman will become the lead label in the Caleres portfolio and accelerate sales. Is this fallout from the failed Capri and Tapestry merger?
AND FINALLY …
Steve Madden To Acquire Kurt Geiger For $360M
Steve Madden has to acquire Kurt Geiger London from a group led by private equity firm Cinven for 289 million pounds ($360.09 million). The transaction will be funded with committed debt financing and cash on hand, it will immediately add capital to Steve Madden's bottom line, and it aligns with initiatives of expanding in international markets, accessories categories, and complementary direct-to-consumer channels.
Link: https://www.nasdaq.com/articles/steve-madden-acquire-kurt-geiger-gbp-289-mln-cash
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Did you know that RMW Commerce has another podcast? Check out The Watson Weekend for an unfiltered and lively eCommerce chat each week with me, Rick Watson, my co-host Jess Lesesky, and an array of interesting guests and topics. All focused on eCommerce. You can find the Watson Weekend by searching for it on iTunes, Spotify, or Youtube.
That’s all for this week! Till next time Watsonians.....
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Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.
Our production partner for the series is Podcast on the Fly. This podcast is produced by RMW Commerce.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
