Wayfair Inc. (W) navigated a challenging economic landscape in the third quarter, delivering a solid performance that beat analyst expectations. The company reported adjusted earnings per share of 22 cents, surpassing the consensus estimate of 13 cents. Quarterly revenue also came in above expectations, reaching $2.884 billion, slightly higher than the projected $2.876 billion.
Despite the positive earnings report, Wayfair’s stock price dropped by 2.6% in after-hours trading. The decline might be attributed to several factors, including a decrease in active customers and orders compared to the previous year. The company reported 21.7 million active customers, down 2.7% year-over-year, and 9.3 million orders delivered, a 6.1% decline. These figures highlight the ongoing challenges facing the home furnishings market amid a potential recession.
Wayfair’s CEO, Niraj Shah, emphasized the company’s focus on cost discipline and customer loyalty, stating, “Once again, we navigated a dynamic consumer environment while driving further discipline on costs to achieve a mid-single-digit Adjusted EBITDA margin for the second quarter in a row.”
The company’s gross profit totaled $873 million, representing 30.3% of total net revenue. Despite this positive result, it’s worth noting that it was slightly lower than the $917 million recorded in the same period last year.
Wayfair continues to prioritize its mobile platform, with mobile devices accounting for 63% of total orders delivered in the third quarter, an increase from 61.7% in the previous year. The company ended the quarter with $1.3 billion in cash and equivalents, while inventory stood at $81 million. Long-term debt at the end of the quarter was $3.061 billion.
Needham analyst Bernie McTernan reiterated his Buy rating on Wayfair shares, maintaining a $60 price target. Despite the positive earnings report, the stock’s performance in after-hours trading highlights the uncertainty surrounding the company’s future amid a volatile economic environment. Investors will be closely watching Wayfair’s performance in the coming quarters to gauge the effectiveness of its cost-cutting measures and its ability to retain customer loyalty.
