Wayfair’s net loss narrows but revenue declines

(Source: wayfair/Facebook)

Wayfair’s annual revenue declined while its net loss narrowed, but an analyst cast doubts on the online home improvement retailer’s strategy amid the expansion of rivals such as Ikea and Walmart.

Wayfair’s revenue fell 1.8 per cent to $12 billion, with US net revenue increasing 0.2 per cent to $10.5 billion and international net revenue decreasing 13.3 per cent to $1.5 billion.

Meanwhile, fourth-quarter net loss improved to $174 million.

“The problem for Wayfair is that it has made cumulative losses of almost $3 billion over the past five years,” said GlobalData MD Neil Saunders.

“Not only is this a ridiculous amount of money for a retail operation to lose, but it has also taken its toll on the balance sheet where the gap between assets and liabilities continues to widen.”

During the fourth quarter, revenue rose 0.4 per cent to $3.1 billion, with US net revenue climbing 0.9 per cent to $2.7 billion and international net revenue declining 2.7 per cent to $404 million.

“Wayfair not only has to swing itself into profit, but it must then dig itself out of the debt hole it has put itself into,” said Saunders.

“We also question management’s understanding of wider market dynamics and the scale and scope of competitive forces in the market as rivals such as Ikea, and even Walmart, plot expansion in the US. This, in our view, will be a major future threat that could dampen growth even as the market picks up.”

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