Wayfair Shares Whipsaw

  • Vladimir Sumina
  • August 2, 2019
  • 0
Some home products bought from Wayfair

Shares of Wayfair whipsawed after the company reported that they had a bigger loss in the second fiscal quarter because the costs for things such as advertising and customer support are up.

They reported a loss of $181.9 million – $1.98 per share – compared with to a loss of $100.7 million – $1.13 a share – last year. Sales for the quarter are $2.34 billion, up 42% compared to a year ago.

The company has always reported double-digit growth in its revenue, but it still hasn’t been able to earn a profit. This could be due to its online-only nature since it is more difficult to acquire and retain customers for an online business than a physical store. That is why they will open their first location at the Natick Mall in Massachusetts sometime this fall.

GlobalData Retail Managing Director Neil Saunders said: “While Wayfair is expert at driving sales growth, it remains terrible at translating this into profitable gains. Wayfair’s advertising costs are out of control. … This completely erodes the already wafer-thin margins and pushes the company deep into the red.”

But Wayfair is committed to its strategy, CFO Michael Fleisher said: “In North America and increasingly in Europe, our investments are paying off in the form of greater scale and higher-levels of repeat over time, which tells us our strategy of not timing our investments to any particular quarter is working as intended over the long-term. We expect to stick to this philosophy and we will not alter our … investments to make any particular quarter more profitable.”

The company has a market cap of approximately $12 billion, and its stock has risen by more than 45% in 2019.

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Vladimir is passionate about writing and believes that good stories can be found everywhere – from books, to movies, video games, even short news stories. Every story has the potential to be interesting, fun, and engaging if told well. That’s why he loves sharing them with the world, and he hopes that you will have as much pleasure reading them as he had writing them.