Source: Company reports/FGRT

2Q17 Results

Boston-based online home goods retailer Wayfair reported 2Q17 adjusted EPS of $(0.26), which was ahead of the $(0.46) consensus estimate. Total revenues were $1.12 billion versus expectations of $1.06 billion, and were up 42.7% year over year. Direct retail revenue rose by 45.9% year over year, to $1.1 billion, and accounted for 98.2% of total sales. Direct retail growth was driven by a 43.1% increase in the number of active customers (to 9.5 million) in the company’s direct retail business, which was partially offset by a 0.5% decline, to $402, in revenue per active customer (defined as a customer who has been active in the last 12 months). Average order value was $258, unchanged from the year-ago quarter. Orders delivered in the quarter totaled 4.28 million, up 31.5% year over year. Repeat customers placed 61.3% of total orders, compared with 57.6% in the year-ago period, and they placed 2.6 million orders in total, up 55.4% year over year. Mobile orders accounted for 44.1% of total orders, up from 38.4% in the year-ago quarter. North American direct retail revenues (which accounted for 88.6% of total direct retail sales) were up 39.0% year over year, driven by improved online visual merchandising, faster delivery and logistics via Wayfair’s logistics networks (CastleGate and Wayfair Delivery Network), penetration of private label brands, and consumers shifting more of their home goods purchasing online. The international direct retail business increased by 136% year over year, to $126 million, driven by strength in the UK and Canada. Wayfair management remarked that it expects momentum to continue in the second half of 2017. The company will continue to focus on international expansion into countries that include Canada, the UK and Germany, and on investing in its logistics networks.

Outlook

For 3Q17, Wayfair expects revenue of $1.16–$1.18 billion, above the $1.15 billion consensus estimate. Additionally, the company expects direct retail revenue to grow at a rate of approximately 37%–40% year over year, to $1.14–$1.16 billion, above the $1.13 billion consensus estimate. Full-year capital expenditures are expected to be approximately 3% of net revenue. Wayfair management did not provide sales guidance for FY17. The consensus estimate calls for FY17 revenue of $4.47 billion, up 32.2%, and adjusted EPS of $(1.57), compared with adjusted EPS of $(2.29) in FY16.