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Wayfair (W) Q4 Loss Wider Than Expected, Revenues Fall Y/Y

Wayfair W reported non-GAAP loss of 92 cents per share for fourth-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 69 cents. Further, the figure compares unfavorably with earnings of $1.24 and 14 cents per share reported in the prior-year quarter and the previous quarter, respectively.

Total net revenues were $3.3 billion, which declined 11.4% year over year but increased 4.2% sequentially. The top line missed the consensus mark by 1.2%.

The top-line decrease was a result of declining domestic and international revenues. Further, a decline in orders per customer affected the results.

Top-Line Details

Net revenues in the United States decreased 8.8% year over year to $2.7 billion. International net revenues also decreased 23% from the prior-year quarter to $517 million. On a constant-currency basis, international net revenue growth was (24.4)%.

Active customers were down 12.5% year over year to 27.3 million. In addition, LTM net revenues per active customer increased 10.6% year over year to $501. Average order value climbed 20.6% year over year to $269.

Total number of orders delivered in the reported quarter was 12.1 million, down 26.7% year over year. In addition, orders per customer for the quarter were 1.89 million compared with 1.96 million in the year-ago period.

Wayfair Inc. Price, Consensus and EPS Surprise

Wayfair Inc. Price, Consensus and EPS Surprise
Wayfair Inc. Price, Consensus and EPS Surprise

Wayfair Inc. price-consensus-eps-surprise-chart | Wayfair Inc. Quote

Further, repeat customers placed 9.2 million orders (accounting for 76.3% of total orders) in the fourth quarter, down 22.7% year over year.

Additionally, 59% of total orders delivered were placed through a mobile device in the reported quarter compared with 59.9% in the year-ago period.

Operating Results

Wayfair’s fourth-quarter gross margin was 27.1%, contracting 190 basis points on a year-over-year basis.

Adjusted EBITDA was $(4) million versus $263 million in the year-ago quarter.

Customer service and merchant fees increased 10.9% year over year to $152 million. Advertising expenses declined 7.8% from the prior-year quarter to $345 million. Selling, operations, technology, general and administrative expenses increased 28% year over year to $580 million.

The company incurred an operating loss of $196 million for the reported quarter. It reported an operating income of $101 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Dec 31, 2021, cash, cash equivalents and short-term investments were $2.399 billion, up from $2.393 billion reported on Sep 30, 2021.

Long-term debt as of Dec 31, 2021 was $3.052 billion compared with $3.049 billion on Sep 30, 2021.

Net cash generated from operations was $89 million versus $130.8 million of cash used in operations in the third quarter.

Further, the company generated free cash flow of $15 million.

Zacks Rank & Stocks to Consider

Wayfair currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the retail-wholesale sector include Arcos Dorados ARCO, DICK’s Sporting Goods DKS and Dollar Tree DLTR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DICK’s is scheduled to release fourth-quarter fiscal 2021 results on Mar 8. It has gained 41.9% over a year. The long-term earnings growth rate for DKS is currently projected at 11.7%.

Arcos is slated to report fourth-quarter 2021 results on Mar 16. It has gained 48.1% over a year. The long-term earnings growth rate for ARCO is currently projected at 24.7%.

Dollar is slated to report fourth-quarter fiscal 2021 results on Mar 2. It has gained 38.6% over a year. The long-term earnings growth rate for DLTR is currently projected at 12.2%.


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