Wayfair shares tank as the online furniture retailer’s losses widen

Earnings

A Wayfair employee works at his desk at the Boston headquarters of Wayfair on July 31, 2018.

Suzanne Kreiter | Boston Globe | Getty Images

Wayfair‘s stock tanked Friday morning, after the online furniture retailer’s losses widened more than expected during the holiday quarter.

Its shares were recently down more than 15% in premarket trading.

The issue for Wayfair has long been, and continues to be, how to make money. The company has been criticized for spending too much money on advertising to acquire new customers on the internet.

Wayfair has yet to report a profit and its quarterly losses continue to widen. Until recently, the retailer was still bulking up its hiring efforts, despite the mounting losses. Wayfair went public in October 2014.

Wayfair’s net loss for the quarter ended Dec. 31 totaled $330.22 million, or $3.54 per share, compared with a loss of $143.85 million, or $1.59 a share, a year ago. Wayfair’s annual net loss almost doubled, to $985 million, in 2019.

Excluding one-time items, Wayfair’s adjusted losses were $2.80 per share, worse than the loss of $2.65 a share analysts were expecting, based on Refinitiv data.

Revenue grew to $2.53 billion from $2.01 billion a year ago. That was in line with analysts’ estimates.

Wayfair said its revenue per active customer rose 1.1% from a year ago to $448. Average order value amounted to $226 during the quarter, down $1 from a year ago, it said. Repeat customers placed nearly 69% of orders online during the fourth quarter, compared with 66.4% a year ago.

Total operating expenses were $882.8 million in the fourth quarter, up from $614.7 million a year ago.

Wayfair earlier this month confirmed it was cutting about 3% of its workforce, or roughly 500 jobs. The retailer did not say how much money it expected to save from the layoffs.

CEO Niraj Shah told analysts during a post-earnings conference call Friday morning that in 2020 Wayfair expects to “better leverage” costs.

For example, the company said it anticipates its spending on advertising, as a percentage of net revenue, will decrease this year.

The company is calling for net revenue during the first quarter to fall within a range of $2.24 billion to $2.28 billion. Analysts had been calling for $2.47 billion, Refinitiv said.

Wayfair said, however, its current forecast does not factor any “significant potential disruption” because of the global coronavirus outbreak.

“We believe our marketplace model, where we offer vast selection to our customers, is an important mitigating factor for us,” CFO Michael Fleisher told analysts.

The company has said a little more than 50% of its suppliers’ product is currently manufactured in China, the epicenter of the coronavirus outbreak.

Wayfair shares are down more than 57% over the past 12 months. The company has a market value of about $6.6 billion. Amid a broader selloff, Wayfair’s stock closed Thursday down about 1.1%.

Read the full earnings release here.

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