Wayfair extends its downward rally reporting higher than expected losses in the fourth quarter

Wayfair extends its downward rally reporting higher than expected losses in the fourth quarter

  • Wayfair extends its downward rally reporting higher than expected losses in the fourth quarter.
  • Wayfair posts $2.53 billion in revenue in the fourth quarter that matched analysts' estimate.
  • Wayfair records $2.80 of losses per share in the fourth quarter versus $2.65 expected.

Wayfair said on Friday that its losses expanded more than previously estimated in the holiday quarter. In premarket trading, the online furniture retailer was reported trading 15% down.

According to the experts, failure to make sufficient money to promote business and support operations has been a long-held issue for Wayfair. The online retailer has faced strong criticism on multiple occasions for its over expenditure on advertising directed at inviting more customers via the internet. The company had its initial public offering (IPO) in October 2014.

Wayfair’s Fourth Quarter Performance Results Versus Analysts’ Estimates

In the quarter that ended on 31st December, Wayfair posted $330.22 million in net loss as compared to a much lower $143.85 million reported in the same quarter last year. In fiscal 2019, the company’s annual net loss increased by almost 100% to register at $985 million.

According to Refinitiv, analysts were expecting the company to print $2.53 billion in revenue in the fourth quarter. In terms of losses per share, they had estimated $2.65 (excluding one-time items) for Wayfair in Q4. In its performance results on Friday, the online retailer matched the analysts’ estimate for revenue while its losses per share were recorded significantly worse at $2.80 per share (excluding one-time items) in the recent quarter. Wayfair had accentuated its revenue at $2.01 billion in 2018’s Q4.

At $448, Wayfair announced a 1.1% growth in its revenue per active customer as compared to the last year. The average value of a placed order was highlighted at $226 in the recent quarter that was only $1 below the figure for last year. In the fourth quarter, 69% of online orders were placed by repeat customers versus 66.4% registered in the same quarter last year.

Wayfair To Layoff 3% Of Its Workforce In The Upcoming Weeks

Wayfair’s total operating expenses were revealed at $614.7 million in 2018’s Q4 which climbed to $882.8 million in the recent quarter. Wayfair also declared earlier in February that it plans on laying off as many as 500 jobs (3% workforce) in the upcoming weeks as part of its cost-cutting strategy.

In its guidance for the fiscal first quarter, the online retailer said that it now expects to generate between $2.24 billion and $2.28 billion in revenue in Q1. Analysts forecast its Q1 revenue to print at $2.47 billion.

Wayfair closed the last week at $63.50 per share in the stock market that marks just over 30% decline in 2020 so far. The stock has dropped over 57% in the past 12 months.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

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