Wayfair (W) Q3 Earnings Surpass Estimates, Revenues Down Y/Y

Wayfair W reported third-quarter 2021 non-GAAP earnings of 14 cents per share, which declined 93.9% year over year and 92.6% sequentially. The reported figure, however, surpassed the Zacks Consensus Estimate of 4 cents per share.

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Total revenues were $3.1 billion, which declined 18.7% year over year and 19.1% sequentially. The top line also missed the consensus mark by 3.4%.

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 20.8% year over year to $2.6 billion. International net revenues also decreased 6.8% from the prior-year quarter to $0.5 billion. Nonetheless, international net revenues reported 12.1% growth on a constant-currency basis.

Active customers were up 1.5% year over year to 29.2 million. In addition, LTM net revenues per active customer increased 7.3% year over year to $484. Average order value climbed 16.5% year over year to $283.

Wayfair Inc. Price, Consensus and EPS Surprise

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

Total number of orders delivered in the reported quarter was 11 million, down 30.1% year over year. In addition, orders per customer for the quarter were 1.92 million compared with 1.94 million in the year-ago period.

Further, repeat customers placed 8.4 million orders (accounting for 76.3% of total orders) in the third quarter, down 25.8% year over year.

Additionally, 57.7% of total orders delivered were placed through a mobile device in the reported quarter compared with 60% in the year-ago period.

Operating Details

Wayfair’s third-quarter gross margin was 28.3%, contracting 160 basis points on a year-over-year basis.

Adjusted EBITDA was $101.1 million compared with $371.1 million in the year-ago quarter.

Customer service and merchant fees increased 0.2% year over year to $139.9 million. Advertising expenses declined 8.4% from the prior-year quarter to $315 million. Selling, operations, technology, general and administrative expenses increased 12.6% year over year to $497.6 million.

The company incurred an operating loss of $69.8 million for the reported quarter. It reported an operating income of $221.9 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2021, cash, cash equivalents and short-term investments were $2.39 billion, reflecting a decline from $2.60 billion reported on Jun 30, 2021.

Long-term debt as of Sep 30, 2021 was $3.049 billion compared with $3.048 billion on Jun 30, 2021.

Net cash for operations was $130.8 million while free cash flow was a negative $203.2 million.

Zacks Rank & Stocks to Consider

Wayfair currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the retail-wholesale sector include AutoNation AN, Conn’s CONN and Macy’s M. While AutoNation and Macy’s sport a Zacks Rank #1 (Strong Buy), Conn’s carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Macy’s, AutoNation, and Conns are currently projected at 12%, 19.1%, and 23%, respectively.

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