Wayfair stock jumped Monday after the online furniture seller posted second quarter results that were easily ahead of expectations. The gains build on a bounce-back year for Wayfair stock.
Wayfair said that it earned an adjusted 87 cents per share for the June-ended quarter, up 85% from a year earlier. That easily beat the 33 cents per-share analysts polled by FactSet were forecasting. Sales increased 5% to $3.27 billion, whereas analysts were projecting Wayfair's sales to come in essentially flat at $3.13 billion.
Along with Wayfair.com, Boston-based Wayfair operates a group of smaller home-focused websites that include AllModern, Birch Lane and Perigold.
The results offered a positive signal about Wayfair's ability to withstand tariffs on imported goods. U.S.-based revenue increased 5.3% to $2.9 billion.
Despite tariffs taking effect in April, prices "remained relatively consistent" in the second quarter, Wayfair Chief Executive Niraj Shah told analysts on a conference call Monday. He said that Wayfair's marketplace strategy helped the company respond to tariffs. There are more than 20,000 suppliers listing products across its websites.
"Suppliers take different approaches to managing cost increases," Shah said. "While some may pass through price increases, others who want to win share in a demand-constrained environment will choose to keep their prices more competitive, and will use all the methods at their disposal to do so."
Meanwhile, the company had 21 million active customers during the June-ended quarter, a 4.5% decrease from a year earlier. But Wayfair's net revenue per customer increased 5.9% to $572.
On the stock market today, Wayfair stock is up more than 10% at 71.78 in afternoon trades.
Wayfair Stock Up 47% This Year
Coming into its Q2 earnings, Wayfair shares had already rallied 47% this year.
After soaring during the pandemic in 2020 and into early 2021, Wayfair stock has mostly struggled and remains well below record highs reached in January 2021. Shares struggled as American consumers cut back on major purchases including furniture in response to inflation and other concerns, starting in 2022.
But the company highlighted that its 5% sales growth was its best since 2021. Growth would have been 6% if not for the company's exit from the Germany market, Wayfair's news release added.
Wayfair is projecting low- to mid-single digit percent sales growth for the third quarter. That was ahead of analyst estimates prior to the report that projected flat revenue from a year earlier.
Shah credited initiatives such as the Wayfair Verified program for identifying high-quality items, as well as the company's rewards program, for driving growth. The furniture market overall is still just so-so, he added.
What "I would say is that the market this year is definitely better than the last three years, where it was down substantially each year," Shah told analysts. "I think the market is still flat to down low-single digits (percent growth). And I would describe the market not as having strength, but as sort of feeling like it's bottomed out, like bumping along the
bottom."
Coming into the report, Wayfair stock had an IBD Composite Rating of 88 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Wayfair's IBD Relative Strength Rating was 96 out of 99. The RS Rating means that Wayfair stock has outperformed 96% of all stocks in IBD's database over the past year.
