Wayfair posted a fourth-quarter loss that exceeded Wall Street expectations as it moves forward with big plans to open several physical stores.
Wayfair’s net loss for the quarter was $202 million, or $1.92 per diluted share, versus net income of $24 million, or 23 cents per diluted share, in the year-prior quarter.
Adjusted for one-time events, net loss per diluted share was 92 cents versus net earnings of $1.24, the company reported.
Wayfair missed a MarketBeat-published analyst average estimate for a loss of 70 cents per diluted share and fell just short of a $3.28 billion revenue estimate as well.
Wayfair posted net revenue of $3.25 billion versus $3.67 billion in the year-previous quarter. Loss from operations was $196 million versus income from operations of $101 million in the year-before quarter.
Net loss for the full year was $131 million, or $1.26 per diluted share, versus net income of $185 million, or $1.86 per diluted share, in the year prior.
Adjusted earnings per diluted share were $2.32 versus $5.04 in the year before, the company stated.
Wayfair posted net revenue of $13.71 billion versus $14.15 billion in the year previous. Loss from operation was $94 million versus income from operations of $360 million in the year before.
In a conference call, Naraj Shah, Wayfair, CEO, co-founder and co-chairman, said supply chain issues and inflation complicated the company’s business in the quarter, although emphasized conversion rates held up. He noted that customer count is off its COVID-19 pandemic peak of 29 million, down to 27 million but still higher than the Q1 2020 figure of 21 million. Consumer behavior has shifted as the pandemic has begun winding down, even if it has done so in an uneven way. More consumers have been inclined recently to shop physical stores as they get out from under stay-at-home guidance. The change of behaviors has had an impact on Wayfair sales.
“We think of it as a pendulum: beginning of COVID, it swung very, very strongly to online, and on our way out of COVID it’s swinging the other way,” Shah said. “We think it’s now coming back towards the middle.”
Outside of the business-to-business Perigold operation, Wayfair’s specialty retail brands including Joss & Main and AllModern, have been a slight drag on business as they are repositioned with tighter curation.
Shah pointed out that plans to develop physical retail locations are moving forward, leveraging Wayfair’s distribution system. The first stores are set to emerge under Wayfair’s specialty retail banners and be limited in size to reflect the particular brand positioning of each of those banners. But it doesn’t end there, Shah said.
“We have a much larger format we’re excited about for Wayfair that will open up next year,” he said. “But the work for that started one and half years ago. And so, the way to think about that is this is just the next step in creating an omnichannel experience that takes advantage of everything we have.”
In announcing the financial results, Shah said, “As we celebrate Wayfair’s 20th anniversary and the company’s rapid growth to a $14 billion household brand, we are proud of our accomplishments and even more excited about what’s ahead. While consumer behavior has changed repeatedly throughout the pandemic, the primary elements for success in our category have not: the home remains top of mind and secular trends favor a long and durable shift to e-commerce. Wayfair has only just begun to scratch the surface of this vast opportunity.
“Over the last two years, we’ve grown our topline by more than 50% without increasing our headcount, which demonstrates the scalability and attractive structural economics of our business. Today, we are continuing our high ROI initiatives across all dimensions — including assortment, discovery, technology and logistics — to set ourselves up for continued strong growth. As we do, we are ready to navigate the macro environment with a strong balance sheet and a talented team, a team that is energized to drive Wayfair’s success over the next 20 years.”