Q2 Earnings Highlights: Wayfair (NYSE:W) Vs The Rest Of The Online Retail Stocks
Let’s dig into the relative performance of Wayfair (NYSE:W) and its peers as we unravel the now-completed Q2 online retail earnings season.
Consumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.
The 6 online retail stocks we track reported a slower Q2. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was 1.3% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Luckily, online retail stocks have performed well with share prices up 18% on average since the latest earnings results.
Weakest Q2: Wayfair (NYSE:W)
Launched in 2002 by founder Niraj Shah, Wayfair (NYSE: W) is a leading online retailer for mass market home goods in the US, UK, Canada, and Germany.
Wayfair reported revenues of $3.12 billion, down 1.7% year on year. This print fell short of analysts’ expectations by 2%. Overall, it was a disappointing quarter for the company with a miss of analysts’ buyer estimates and slow revenue growth.
"Q2 was a dynamic quarter that resulted in another period of share gain, amid continued macro headwinds that are pressuring the ways customers are shopping the category. Customers remain cautious in their spending on the home, and our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis," said Niraj Shah, CEO, co-founder and co-chairman, Wayfair.
Wayfair delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The company reported 22 million active buyers, up 0.9% year on year. Interestingly, the stock is up 2.2% since reporting and currently trades at $55.60.
Read our full report on Wayfair here, it’s free.
Best Q2: Carvana (NYSE:CVNA)
Known for its glass tower car vending machines, Carvana (NYSE:CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Carvana reported revenues of $3.41 billion, up 14.9% year on year, outperforming analysts’ expectations by 4.6%. The business had a mixed quarter as revenue growth regrettably stalled.
Carvana achieved the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 34.5% since reporting. It currently trades at $179.24.
Is now the time to buy Carvana? Access our full analysis of the earnings results here, it’s free.
Coupang (NYSE:CPNG)
Founded in 2010 by Harvard Business School student Bom Kim, Coupang (NYSE:CPNG) is a South Korean e-commerce giant often referred to as the "Amazon of South Korea".
Coupang reported revenues of $7.32 billion, up 25.4% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a miss of analysts’ buyer estimates.
Interestingly, the stock is up 19.1% since the results and currently trades at $24.62.
Read our full analysis of Coupang’s results here.
Revolve (NYSE:RVLV)
Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve Group (NASDAQ: RVLV) is a next generation fashion retailer that leverages social media and a community of fashion influencers to drive its merchandising strategy.
Revolve reported revenues of $282.5 million, up 3.2% year on year. This result surpassed analysts’ expectations by 1.9%. Aside from that, it was a mixed quarter as it also produced a decent beat of analysts’ buyer estimates but slow revenue growth.
The company reported 2.58 million active buyers, up 4.8% year on year. The stock is up 38.5% since reporting and currently trades at $24.34.
Read our full, actionable report on Revolve here, it’s free.
Chewy (NYSE:CHWY)
Founded by Ryan Cohen who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.
Chewy reported revenues of $2.86 billion, up 2.6% year on year. This print met analysts’ expectations. More broadly, it was a weaker quarter as it logged slow revenue growth.
The stock is up 12.6% since reporting and currently trades at $29.08.
Read our full, actionable report on Chewy here, it’s free.
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