Wayfair Inc. (W) Slides on Tighter Fourth Quarter Guidance
Shares of Boston, MA, based Wayfair Inc. (W) fell on Tuesday, against the backdrop of a mixed day in stocks overall. Wayfair's stock was down 13.98%, falling $6.41 per share, to close at $39.43, on volume of 7,939,254 shares. Despite positive third quarter results, the company reduced guidance for the fourth quarter, citing the holiday quarter of 2014 as exemplary and unlikely to be repeated. The market ignored the good news for the third quarter, selling off on the lower fourth quarter guidance.
On Tuesday the company reported it's results for the third quarter of 2015, ended September 30. The company reported that total net revenue came in at $594 million, an increase of nearly 77% over the $336 million in net revenue for the same quarter a year earlier. This included $545 million in direct retail revenue, an increase of nearly 91% over 2014. Meanwhile the number of active customers in the company's direct retail business reached 4.6 million as of September 30, representing a more than 60% increase over the same date a year earlier.
On the earnings side, the company had a GAAP net loss of -$15.5 million, or -$0.13 per share, down from a loss of -$28.9 million, or -$0.59 per share, from the third quarter of 2014. Net revenue growth showed similar improvement on a year-over-year basis. Net revenue for the nine months ended September 30 came in at $1.51 billion, well ahead of the $910 million figure for the first nine months of 2014.
“We are very pleased to report the third quarter in a row of tremendous growth across the business,” said Niraj Shah, CEO, co-founder and co-chairman, Wayfair. “New customer growth and repeat customer growth continue to accelerate at a phenomenal pace as we enhance our offering and build greater brand awareness with consumers. We are well positioned to enter the holiday season with key improvements across assortment, merchandising and marketing - and look forward to further building our leadership position as the number one destination for home furnishings and décor.”
However, Wayfair Chief Financial Officer Michael Fleischer noted that fourth quarter sales would be measured against a very strong 2014 fourth quarter. Though year-to-date results have been exemplary, the trend might slow in the fourth quarter, at least when compared to the trend of the previous year. Put another way, the results of the past four quarters are getting increasingly difficult to match, and Fleischer prefers to provide a "thoughtful" forecast. Investors interpreted this as a sign to expect slower sales growth going forward.
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