Wayfair Misses Q3 Revenue Estimates; Shares Fall


Wayfair (W), an American e-commerce portal selling furniture and home goods, reported weaker-than-expected third-quarter revenue, due to global supply chain disruptions and fewer orders.

Wayfair’s quarterly net revenue fell 18.7% year-over-year to $3.12 billion, missing the consensus estimate of $3.24 billion.

Furthermore, the company reported adjusted earnings of $0.14 per share, significantly lower than Q3 FY20 adjusted earnings of $2.30 per share.

During the quarter, the company’s active customer base rose 1.5% year-over-year to 29.2 million, while repeat customers placed 8.4 million orders, a 25.8% fall compared to the same quarter last year.

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Noting that consumer demand for home goods remains resilient, while shifting preference towards post-pandemic travel has slowed growth for the same, Niraj Shah, CEO, co-founder, and co-chairman of Wayfair said, “Our long-term vision is in sharp focus coming out of the pandemic period. The initiatives required to realize it are in flight, even as we work through near-term macro challenges like supply chain congestion and related inflation. We are, as ever, focused on the long-term, balancing strong growth and profitability over years not quarters, and solidifying our position as the definitive destination for the home.”

Wall Street’s Take

In response to Wayfair’s poor performance, Wells Fargo analyst Zachary Fadem lowered his price target on the stock to $250 (0.5% upside potential) from $285 while maintaining a Hold rating.

Fadem noted that Wayfair’s revenue shortfall was anticipated while profitability was modestly better than expected. Going forward, he expects supply chain issues to persist in Q4, with operating costs expected to increase, while sales decline. Keeping these headwinds in mind, the analyst expects consensus estimates to move sharply lower for FY22.

Fadem concluded, “While we believe W’s business has undoubtedly benefited from COVID-19 (nesting, work/school from home, the shift online, housing demand, etc.), shares are entering a digestion/transition period as investors grapple with sharp valuation expansion, very difficult comparisons and increasingly low visibility into 2021 sales/margin trends.”

Overall, the stock has a Moderate Buy consensus rating based on seven Buys, six Holds, and two Sells. The average Wayfair price target of $291.79 implies 17.7% upside potential to current levels. Shares have lost 15.1% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Peloton’s performance.

Looking at the W website traffic, in September, Wayfair’s website recorded a 27.2% monthly decline in visits, against the same quarter last year. Similarly, year-to-date website traffic growth fell 2% compared to the same period last year.

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