Wayfair Reports Strong Q2 Results

by Warren Seah

Wayfair (ticker: W) has exceeded expectations for its second quarter, leading to significant gains in premarket trading. The online furniture retailer reported adjusted earnings of 21 cents per share, far surpassing Wall Street’s forecasted loss of 73 cents per share, according to FactSet. Although the company experienced a net loss of 41 cents per share (equivalent to $46 million), it managed to achieve a total net revenue of $3.17 billion, beating the estimated $3.10 billion. However, there was a 7.6% decline in active customers compared to the same period last year, with 22 million customers currently active.

Despite the decrease in active customers, Wayfair’s net revenue per active customer over the past 12 months, ending on June 30, saw a slight increase from $537 to $545. The company considers this metric as a vital indication of customers’ purchasing behaviors, including their initial and repeat purchase patterns.

CEO Niraj Shah credited Wayfair’s success to its efforts in reducing costs, focusing on fundamental aspects, and cultivating stronger customer and supplier loyalty. The company’s second quarter results showed adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $128 million and free cash flow of $128 million. In comparison, during the same period last year, Wayfair had negative EBITDA of $108 million and negative free cash flow of $244 million.

Wayfair has been proactively addressing its financial position by implementing cost-cutting measures following multiple instances of wider-than-expected losses. In January, the company eliminated around 1,750 positions globally (approximately 10% of its workforce), in addition to the 870 positions already eliminated in August.

As a result of its impressive performance, Wayfair stock has surged by 7.6% during premarket trading. The stock price has more than doubled this year, further highlighting the company’s successful trajectory.

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