Niraj Shah, Wayfair co-founder, co-chairman and CEO, provided details about the company’s physical store initiative in a conference call during which he also discussed a fourth quarter that produced financial gains.
Net loss was $116 million, or 89 cents per diluted share, versus a net loss of $128 million, or $1.02 per diluted share, in the year-prior quarter, the company noted. Adjusted for one-time events, net income was $131 million, or 85 cents per diluted share, versus a loss of $32 million, or 25 cents per diluted share, in the year-earlier period.
An analyst consensus estimate from Zacks Investment Research called for adjusted diluted earnings per share of 64 cents and revenues of $3.29 billion.
Net revenue was $3.34 billion versus $3.12 billion in the year-before quarter, according to the company. Income from operations was $84 million versus an operating loss of $117 million in the year-previous period.
U.S. revenue was $2.94 billion versus $2.74 billion in the year-past quarter.
For the full fiscal year, net loss was $313 million, or $2.44 per diluted share, versus a net loss of $492 million, or $4.01 per diluted share, in the year prior. Adjusted net income was $400 million, or $2.60 per diluted share, versus $16 million, or 13 cents per diluted share, in the year earlier.
Net revenue was $12.46 billion versus $11.85 billion in the year before, Wayfair stated. Income from operations were $17 million versus an operating loss of $461 million, in the year previous.
U.S. revenue was $10.97 billion versus $10.37 billion in the year past.
In a conference call, Shah said, in the fourth quarter, important highlights were share taking that, in top-line growth, overcame the drag of the macroeconomic conditions and the substantial flow-through of that share growth to bottom line results.
Shah also took time to detail how the company’s physical store initiative is evolving.
“You’ve heard us talk at length about the major points of success we’ve had in our store just outside of Chicago for nearly two years now,” he said. “More than half the customers that have come through the store have been entirely new to file, and we’ve seen continued post-store visit lift on sales in the surrounding area. That journey will continue with the launch of our next store in Atlanta early this year, followed by our stores in Columbus and Denver.”
Shaw said the new stores “will carry over many of the core design themes that have resonated so well with customers in Chicago. Atlanta and Denver will be in the 150,000 square foot range, while Columbus will be a smaller format, roughly 70,000 square feet. Each store will showcase the true breadth of our catalog in a variety of special ways, and you’ll find some of the favorites from Chicago, like the Dream Center and Shower Wall, appearing in our Atlanta store as well.”
Shah called the brick-and-mortar initiative a hallmark example of Wayfair’s ability to drive cost-effective execution at scale.
“We already have years of investment across the most significant areas a retailer needs to be successful: our brand, our fulfillment and delivery capabilities, our supplier relationships, and our curated offerings,” he said. “The incremental cost here is simply the cost of the stores themselves. These stores are all located in relatively close proximity to one of our fulfillment centers, so when customers purchase large parcel items, those products can show up on their doorstep in a matter of days rather than weeks. Of course, there’s a vast selection of cash and carry items in the stores themselves.”
He said products offered in physical stores are largely owned by the company’s suppliers, as is the case with Wayfair’s CastleGate distribution operation.
“In many ways, the store functions as a new form of consumer marketing, with the product offering and inventory provided by our suppliers, who’ve been very keen to put their items on our shelves,” Shah said. “From the beginning, one of our objectives with physical retail has been growing share of wallet among our shoppers across all categories, and also notably, when it comes to frequency items. Today, customers are, on average, spending roughly $600 per year on Wayfair across two shopping occasions, out of the roughly $3,000 they spend on their homes in total each year. Part of the story is one of awareness. Walking through a physical store gives every shopper a broad view of the breadth of our categories and the depth of our assortment, often inspiring purchases they didn’t know they could get through Wayfair. We’re seeing this work in real time. In the Chicago DMA, we’ve seen a nearly 30% spread in the performance of our frequency categories, items such as bedding, decor, kitchen and tabletop, as a few examples, compared to similar DMAs.”
In announcing the fourth-quarter results, Shah said, “Q4 capped off a tremendous year for Wayfair, with revenue growing 7.8% year-over-year excluding the impact of Germany. We had our third consecutive quarter of new customer growth on top of healthy growth in repeat orders, all in the face of a category that contracted in the low single digits for the final quarter of the year. Twenty-twenty five was a year where we returned to growth and accelerated throughout the year through a number of organic business strategies that can compound for years to come.”
