Wayfair (W) Q2 2021earning beat estimates

Wayfair shares jumped 10% on Thursday after second-quarter furniture vendor results showed they were holding on to some of the gains they made in their business during the pandemic.

Earnings exceeded estimates, and although sales declined and fell short of Wall Street expectations, revenues were above pre-pandemic rates.

Wayfair took advantage of a growing demand during the pandemic that consumers spent more money online during closures. Buyers were also focused on improving their homes as they spent more time working and relaxing there.

But Wayfair’s latest results show that it had been able to attack some of these new buyers. The company said active customers grew to 31.1 million, an increase of nearly 20% year-on-year.

“Many of you have been wondering about whether Wayfair can be sustainably profitable as the pandemic recedes, and this is clear evidence to make this case,” CEO Niraj Shah said during a conference call. “Consumer balance sheets are strong and interest in the home is not going away after the pandemic.”

“While there may be some short-term rebalancing towards brick and mortar, for the next two quarters, we are confident that structural trends towards e-commerce will continue and potentially, accelerate,” Shah added.

The company’s stock rose nearly 12% to a point Thursday, eventually closing at $ 276.16. Shares fell 25% from their 52-week high of $ 369, which reached Jan. 14, as investors were worried their pandemic boost was unlikely to last.

Here’s how the company performed for its second quarter ended June 30 compared to what analysts interviewed by Refinitiv anticipated:

  • Earnings per share: $ 1.89 vs $ 1.15 expected
  • Revenue: $ 3.86 billion vs. $ 3.94 billion expected

During its second quarter, the company reported a net income loss of $ 130.4 million, or $ 1.14 per share, compared to $ 273.9 million, or $ 2.54 per share, a year ago. before.

Excluding the items, the company reported earnings of $ 1.89 per share, beating the $ 1.15 per share forecast by analysts interviewed by Refinitiv.

The company reported revenue of $ 3.86 billion, compared to expectations of $ 3.94 billion. Revenues fell about 10% year-on-year, but are up 11% compared to the first quarter of this year.

Net revenues per active customer in the last 12 months were $ 478 at the end of the second quarter, an increase of 8.6% year on year.

“The house remains a high priority for our customers and long-term tailwinds to the growth of online categories are firmly in place,” Shah said in the earnings statement.

During the quarter, Wayfair said its average order value was $ 278, higher than the $ 277 the year before.

The company shipped 13.9 million orders during the quarter, down 26.5% year-over-year.

Repeated customers placed 10.5 million orders in the quarter, representing 75.6% of total orders. Repeated customer orders decreased 17.6% year-on-year.

“We believe we are leaving the pandemic period with an even stronger repeat customer base than when we first entered it. We should have long-term benefits, given that it has cost us relatively less to drive repeat purchases than initial orders. , ”Shah said.

“On the surface, what we will see is a modest drop in the number of active customers and a slightly lower order frequency. But going away, we recognize that we will have acquired almost 18 million new customers by the end of 2020.” , said Shah.

While retailers said delays at every point in the supply chain have reduced stock, Shah said Wayfair sees sequential improvements in availability and inventory compliance.

“But progress is incremental and does not happen overnight. Some port congestion is easing, and our international supply chain services are growing rapidly to support our suppliers,” Shah said. “However, the industry will still have to deal with tighter selection and shorter delivery and delivery times than desired, which are unlikely to normalize until some point in 2022.”

Long-term supply chain delays have also resulted in inflation.

“We work with our suppliers to go through some of these higher costs while paying close attention to our customers’ reactions to higher prices across all our classes, ”Shah said. “So far we believe customers are generally absorbing the higher prices reasonably well.”

After four quarters of growth above 40%, its revenue was expected to fall 8.4% for the second period, according to StreetAccount.

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