Boxed CEO details strategic review amid ‘real disconnect’ in the stock

Boxed Co-Founder & CEO Chieh Huang joins Yahoo Finance Live to break down the company's reasoning behind its strategic review, how it's aiming for new funding, and the state of the U.S. consumer.

Video transcript

SEANA SMITH: All right, well, online retail platform Boxed is saying that its board of directors have begun exploring strategic alternatives for the companies, including a possible sale. The company added that it's aiming to announce additional funding within the next 45 days.

Joining us now is Boxed cofounder and CEO Chieh Huang. Chieh, it's great to see you again. It's been a while. So talk to us just about what happened with Boxed and the road ahead for your company.

CHIEH HUANG: Yeah, so it's no secret that we've had quite a turbulent ride in the public markets since we've gone public about a year ago. And so you really saw a double whammy between kind of the sentiment around tech companies as well as e-commerce companies really kind of take a dip in not only the US but the world.

During the last several months, as we've kind of spoken about in our previous earnings calls, we've pursued additional financing, and we're expecting additional news to be announced in the next 45 days. But as we explore that, we want to make sure we maximize shareholder value. So that includes looking for partners, potential merger opportunities, and potential buyers of the business.

DAVE BRIGGS: It's good to see you. Theoretically, big picture seems like an economy that would play into your hands. Inflation has impacted the consumer. Everything at the grocery store is between 10% and 12% more expensive than it was a year ago. So in particular, what went wrong with the business model? It seems to be something that would work, that would play well today.

CHIEH HUANG: Yeah. I don't know if I could say anything went wrong with the business model. So I think there's a real disconnect between what we've accomplished as a team and kind of how the stock market has reacted to not only us but similar companies in e-commerce and technology over the last year.

When you look at our last earnings, we reported an 88%-- over an 88% growth in gross margin. Gross profit for our retail business was up over 500 basis points. Our B2B business was up over a combined 50-plus percent through Q3 of last year. So these are all great things, I think, for the business, and I'm really proud that we were able to accomplish because we said we were going to do these things. But at the same time--

DAVE BRIGGS: So where's the disconnect?

CHIEH HUANG: --certainly as you look at the stock chart--

DAVE BRIGGS: Where's the disconnect with investors?

CHIEH HUANG: Yeah, I think it is the macro environment. So, you know, just as you guys have been talking about over the last kind of several segments here, really the Fed tightening has kind of dampered the amount of liquidity left in the market, and it's really dampened the sentiment for companies like us. On top of that, I think it's also no secret for anyone that follows us liquidity has come into focus here.

That's why I also think it's really important for us to make that announcement within the next 45 days that we've secured additional financing. Of course there's no promise that, of course, that we will, and even if an offer is made, it might not be acceptable to us. But at the same time, I think that's one of the other things that has come into focus for our company.

SEANA SMITH: Chieh, have you gotten any interest? I don't know whether or not you're able to share that with us. And then when it comes to the consumer, you're blaming a lot of the troubles that the company has faced on the macro environment right now. What are you seeing from the consumer just in terms of their willingness to spend and what they're spending on?

CHIEH HUANG: Yeah, what's super-- so I wish I can comment more about kind of exact folks who have or have not kind of reached out and the interest that we've gotten. I would point folks back to the press release on any additional announcements. If there are substantive updates, we do feel like it's important to let shareholders know, and we'll be sure to do so.

On your point about the macro environment and the consumers in this environment, I mean, both of you guys are really hitting the nail on the head. Traditionally in inflationary environments or recessionary environments, what you see is consumers trading up or down, down in terms of hard discounters, dollar stores. The folks with the wherewithal to stock up because maybe they go through the same drink every single week are going to try to stock up and buy in bulk. And so you're really seeing that.

Our Average Order Value, our AOV, is at all-time highs. These are all things that, you know-- our net revenue per active customer has grown significantly over the last year. So again, I think what you're seeing is oftentimes what I think before I go to bed at night, it's where is that disconnect between what we've been doing and where the consumer is spending their money and what our stock performance is. And so that's what the strategic review is all about as well as the fundraising process.

DAVE BRIGGS: And you're one of many SPAC mergers that has really turned south in the last year or two. Do you expect, beyond Boxed, kind of a chilling effect in that regard?

CHIEH HUANG: I do think so. I think, you know, the SEC kind of got exactly what they wanted to was to really chill kind of the SPAC market. I can only speak for ourselves in the sense that, you know, we had and continue to have a real business with nine figures of revenue, a growing gross-margin line, a software business that just signed an eight-figure contract. So we hope as we continue along this path as a public company that folks will disassociate us with kind of how we went public with the fact that just that, we're a public company doing what we think we can do.

DAVE BRIGGS: Best of luck to you. Chieh Huang, appreciate you being on with us. Thank you.

CHIEH HUANG: Thanks very much.