Home furnishings retailer Wayfair (W 62.88, +11.75) trades about 23.0% higher, busting clear through August 2015 highs, after the Q1 beat and better than expected guidance from this morning.
For those who may not be familiar, Wayfair is mainly an e-commerce retailer offering a selection of home furnishings and décor. The company’s sites include the namesake Wayfair, Joss & Main, AllModern, DwellStudio and Birch Lane.
Now, getting back to the results, Wayfair reported a better than expected Q1 loss per share of $0.48 on better than expected revenues which rose 28.6% compared to last year to $960.8 million. Active customers in Wayfair’s Direct Retail business reached 8.9 million as of March 31, 2017, a 45.8% increase compared to the prior year.
That being said, Wayfair’s Direct Retail business saw revenue increase 32% year-over-year to about $940 million in Q1. Specifically, in the US the Direct Retail business was up 25% compared to last year to $838 million as the company continues to capitalize on the migration from brick-and-mortar stores to its more user-friendly online platform. The company noted that there were certain macro factors in the Q1 results, including the catch-up of tax refund payments in late February and early March, but underlying strength in the business has continued. Not to be outdone, the company’s Canada, UK and Germany results were up 163% versus a year ago.
Looking ahead, Wayfair continues to see strength in the underlying business heading into Q2. The company is forecasting Direct Retail revenues in the range of $1.015-1.035 billion for a growth rate of about 34-37% rear-over-year. Quarter-to-date, management noted that Direct Retail gross revenues are tracking in the 40% range. The company forecasts Other revenues for Q2 in the range of $15-20 million for a total revenue range for Q2 of $1.030-1.055 billion. Additionally, Wayfair is targeting gross margins of about 23% for Q2 and throughout FY17.
In all, Wayfair posted a strong quarter and gave some favorable guidance on the call. As the shares trade to all-time highs, one can safely assume the revenue growth and the underlying brick-and-mortar retail sector weakness can be reasoning enough for the strong reaction to earnings.