Wayfair (W) Q2 2021 Earnings Exceed Estimates
Wayfair stock rose more than 10% on Thursday after the furniture seller’s second quarter results showed he was sticking to some of the profits he made in his store during the pandemic.
Profits beat estimates and while sales fell and fell below Wall Street’s expectations, revenues were above pre-pandemic maturities.
Wayfair benefited from increasing demand during the pandemic as consumers spent more money online during the lockdown. Buyers also focused on improving their home as they spent more time working and relaxing there.
But Wayfair’s latest results show that it has retained some of these new buyers. The company said the number of active customers rose to 31.1 million, an increase of nearly 20% year over year.
“Many of you have had questions about whether Wayfair could be sustainably profitable as the pandemic subsided, and this is clear evidence of that.” CEO Niraj Shah said during a conference call about the results. “The consumer balance sheet is strong and interest in home ownership has not waned after the pandemic.”
“Although there may be a short-term realignment towards brick-and-mortar business in the next few quarters, we are convinced that the structural trends towards e-commerce will continue and possibly accelerate,” added Shah.
The company’s shares rose nearly 12% on Thursday. The stock is down around 24% from its 52-week high of $ 369 on Jan. 14 as investors feared the pandemic surge was unlikely to continue.
The company performed in the second quarter ended June 30, compared to the expectations of the analysts surveyed by Refinitiv:
- Earnings per share: $ 1.89 versus an expected $ 1.15
- Revenue: $ 3.86 billion versus $ 3.94 billion expected
For the second quarter, the company posted net income loss of $ 130.4 million, or $ 1.14 per share, compared to $ 273.9 million, or $ 2.54 per share, a year earlier.
Without items, the company reported earnings of $ 1.89 per share, beating the $ 1.15 per share that Refinitiv surveyed analysts had expected.
The company reported sales of $ 3.86 billion, compared to expectations of $ 3.94 billion. Revenue was down about 10% year-over-year, but increased 11% compared to the first quarter of this year.
Net revenue per active customer for the past 12 months was $ 478 at the end of the second quarter, up 8.6% year over year.
“The home is still a high priority for our customers and longer-term tailwind for the growth of the online categories is firmly anchored,” said Shah in the earnings release.
During the quarter, Wayfair said the average order value was $ 278, up from $ 277 a year earlier.
The company shipped 13.9 million orders in the quarter, down 26.5% year over year.
Regular customers placed 10.5 million orders in the quarter, representing 75.6% of total orders. Orders from regular customers fell by 17.6% compared to the previous year.
“We believe that we will leave the pandemic season with an even stronger regular customer base than at the beginning. We should have long term benefits as it costs us relatively less to make repeat purchases than initial orders, ”said Shah.
“On the surface you can see a modest decrease in the number of active customers and a slightly lower order frequency. But if you zoom out, you can see that we gained nearly 18 million new customers over the course of 2020, ”said Shah.
While retailers said delays at every point in the supply chain have reduced inventory levels, Shah said Wayfair has seen sequential improvements in inventory availability and handling.
“But progress is incremental and doesn’t happen overnight. Some port congestion is easing and our Asia-based international supply chain services are growing rapidly to support our suppliers, ”said Shah. “Still, the industry is still faced with narrower choices and shorter lead and delivery times that are unlikely to normalize by 2022.”
The prolonged delays in the supply chain also lead to inflation.
“We are working with our suppliers to manage some of these higher costs while closely monitoring our customers’ reactions to higher prices in all of our classes,” said Shah. “So far we believe that customers are generally absorbing the higher prices reasonably well.”
After four quarters with a growth of over 40%, according to StreetAccount, sales should decrease by 8.4% in the second period.