Online home decor retailer soars in Q4, beating Wall Street expectations

Wayfair credits innovation, increasing brand awareness and repeat customers for its strong fourth quarter growth.



The home decor brand’s total net revenue for the fourth quarter ended December 31, 2016, rose 33.1% from last year to $984.6 million, topping analysts’ expectations for $975.32 million. The company’s gross profit was $238.6 million, or 24.2% of total net revenue.



Direct Retail net revenue, consisting of sales generated primarily through Wayfair's five sites, increased $273.4 million to $959.0 million, up 39.9% year-over-year (YoY). The number of active customers in its Di-rect Retail business reached 8.3 million, an increase of 53.9% YoY, and repeat customers placed 2.7 million orders in the fourth quarter of 2016, an increase of 63.1% YoY. Overall, these shoppers placed 58.0% of total orders in the fourth quarter of 2016, compared to 54.3% in fourth quarter 2015.



Orders delivered in the fourth quarter of 2016 were 4.7 million, an in-crease of 52.8% YoY, and average order value was $203 for fourth quar-ter 2016, compared to $222 in fourth quarter 2015.



Meanwhile, 43.3% of total orders delivered for the Direct Retail business were placed via a mobile device, compared to 36.4% in the fourth quarter of 2015. Orders per customer, which were measured as last 12 months (LTM) orders divided by active customers, was 1.70 for the fourth quar-ter, down from 1.71 year over year.



For the year, total net revenue increased $1.1 billion to $3.4 billion, up 50.2% YoY, and Direct Retail net revenue increased $1.2 billion to $3.3 billion, up 59.7% YoY. Meanwhile, over the last 12 months, net revenue per active customer was $395, an increase of 3.7% YoY.



"As we continue to rapidly gain market share in the approximately $600 billion home category across North America and Europe, we are reaping the gains from the large, long-term investments we have been making over the past few years,” said Niraj Shah, CEO, co-founder and co-chairman, Wayfair. “Our largest investment is in our international busi-ness in Canada, the United Kingdom and Germany, where we are starting to see real traction and increased brand awareness.”



In the U.S., the company is also investing in its proprietary logistics net-work, including CastleGate and the Wayfair Delivery Network, as well as in newer categories, such as home improvement and housewares.



“Even with this substantial ongoing investment in our U.S. business, the U.S. business continues to deliver strong results,” Shah added. “In 2017, our team will continue to innovate at a rapid speed to deliver on a num-ber of strategic initiatives that will solidly reinforce Wayfair’s leadership position as the best place to shop for home.”