Wayfair (W) experiences earnings decline in fourth quarter of 2020, income decline

Niraj Shah, CEO of Wayfair

Ashlee Espinal | CNBC

Wayfair reported quarterly sales on Thursday that fell short of analysts’ expectations. Although the online furniture retailer gained more customers during the reporting period, it bought smaller, cheaper items, which lowered average order values.

Stocks initially fell more than 7% ahead of the stock market trade as investors feared the pandemic surge the company could see with more people investing in their homes could ease.

However, management quelled those fears during a conference call, citing continued optimism in the home and new growth pockets category. Shares made up losses and rose nearly 6%.

This is how Wayfair performed in the fourth quarter ended December 31, compared to analyst expectations based on a survey by Refinitiv:

  • Earnings per share: $ 1.24 adjusted versus 86 cents expected
  • Revenue: $ 3.67 billion versus $ 3.76 billion expected

“As in virtually all categories, home shopping is moving quickly and structurally online,” said CEO Niraj Shah during a conference call with analysts. “We are and should continue to take oversized shares. … The market is huge and undersupplied.”

Wayfair reported net income of $ 23.8 million, or 23 cents per share, compared to a loss of $ 330.2 million, or $ 3.54 per share, a year ago. Without one-off adjustments, the company made $ 1.24, better than the 86 cents forecast by analysts.

Revenue increased nearly 45% from $ 2.53 billion a year ago to $ 3.67 billion. However, this did not match what analysts had expected to be $ 3.76 billion.

The company announced that the number of active customers increased 53.7% to 31.2 million. These are people who made a purchase on Wayfair in the past year.

However, the average order value fell slightly from $ 226 last year to $ 223.

The company has not yet presented a financial outlook for 2021. However, growth is likely to slow as the pandemic begins. In 2020, sales soared as customers flocked to the site to purchase items for their home offices, bedrooms, and backyards.

Looking ahead, Wayfair said the growth will expand the professional business in North America, become a larger home appliance company by adding more brands to its website, and accruing more credit card members.

Wayfair stock is up more than 240% in the past 12 months since the market closed on Wednesday. The company has a market capitalization of $ 25.7 billion.

The full Wayfair press release can be found here.

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