Wayfair Inc. announced a loss of $ 330.2 million in the fourth quarter, bringing the 2019 balance sheet to nearly $ 1 billion.
Wayfair ends its fiscal year on a negative note, proving once again that it is unable to conduct its business profitably, wrote Neil Saunders, managing director of GlobalData Retail.
Calling the end-of-year loss of tearing, Saunders, like other analysts, notes that there is no clear path to profitability.
Wayfair
W, -4.29%
$ 2.53 billion in revenue, up from $ 2.01 billion and in line with the FactSet consensus. The online home retailer has long-term debt of $ 1.46 billion.
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Management now appears to be taking a much more aggressive stance to leverage better recent strategic investments and drive the company's unique business model toward sustained profitability, wrote Oppenheimer analysts led by Brian Nagel.
While we applaud these efforts, we do not expect traditional Wayfair investors to embrace Wayfair's new direction until clearer evidence of a better way forward for the chain emerges.
Oppenheimer maintained its outperformance rating on Wayfair stocks, calling it long term and speculative in nature. Oppenheimer has a 12-18 month course objective of $ 120 on Wayfair shares.
In mid-February, Wayfair announced it would cut 550 jobs, and the company highlighted the operational changes it is making to increase efficiency in the New Year during its results of the fourth quarter.
Advertising expenses for the quarter amounted to $ 310.9 million, the total for the year reaching $ 1.1 billion. This is an area in which Wayfair executives say they will be more efficient in their spending.
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We are simply refining our execution and our focus on costs, said Michael Fleisher, CFO of Wayfair, during the call for results, according to a transcript from FactSet. Over time, we expect our efforts to translate into improved profitability and free cash flow trends, but the associated benefits are not instantaneous and will take time to begin to materialize.
UBS analysts are cautious about withdrawing advertising and other investments.
(W) We believe Wayfair is at risk of slowing sales as it implements these measures, particularly with macro uncertainty due to Covid-19, wrote UBS analysts led by Michael Lasser.
UBS assesses the neutrality of the Wayfair share with a price target of $ 65, against $ 90.
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Wayfair maintains that the cuts and rationalization will not harm other efforts to develop the business.
The exciting thing here is that none of these reductions, while beneficial to bottom line over time, actually limit our ability to continue investing against our initiatives. long-term growth, said general manager Niraj Shah on the call.
However, Canaccord Genuity analysts already note a deceleration at the top of the list, with direct retail revenue growth reaching 26.5% year-on-year in the fourth quarter compared to 36% year-on-year in the third quarter.
And CFRA is focusing on headwinds that are beyond the control of the company.
We expect further major supply chain disruptions in China (where Wayfair supplies more than half of its stocks), compounding the persistent disruption in consumer demand for wholesale prices higher prices resulting from US tariffs on Chinese imports, writes Tuna Amobi in a note.
CFRA demoted Wayfair to sell pending and reduced its price target to $ 55 instead of $ 95.
Wayfairs Fleisher said the company's advice does not take into account any significant potential disruption of the virus. We believe that our market model, where we offer a wide selection or our customers, is an important mitigating factor for us.
Wayfair forecasts first quarter revenue of around $ 2.235 billion and $ 2.275 billion. The FactSet consensus relates to revenues of $ 2,295.7 billion.
Wayfair stock has fallen 64.4% in the past 12 months, while the S&P 500 index
SPX, + 2.84%
gained 8.1% over the period.
