Digital Retail News
Wayfair Shares Boosted By COVID-19 Announcement
Wayfair Inc. (NYSE: W), one of the world’s largest online destinations for the home, today outlined some of the many steps it is taking to meet strong continued customer demand while protecting the health and safety of its customers, employees, partners and greater community in this unprecedented global moment. Wayfair also updated investors on its business trends and priorities in light of these extraordinary circumstances, and announced additional steps to strengthen its balance sheet. The company expects to meet or exceed its first quarter 2020 guidance for consolidated net revenue growth and Non-GAAP Adjusted EBITDA Margin.
“We are closely monitoring the current market as we all respond to the threat of COVID-19. Wayfair’s e-commerce model is uniquely suited to serving customers’ very real needs at this challenging time, and we are committed to doing so while taking all necessary steps and precautions to ensure the safety of our customers, employees, and communities. We are incredibly proud of our team of over 16,000 people and the way they have mobilized to both take care of our customers and to help our local communities,” noted Niraj Shah, CEO, co-founder and co-chairman, Wayfair. “We are encouraged by our increasing sales momentum, yet remain highly focused on our plan to rapidly reach profitability and positive free cash flow. The additional capital we are raising, though not strictly necessary, should only enhance our ability to successfully navigate through any market backdrop.”
Health & Safety Measures
While the majority of Wayfair’s employee base has smoothly transitioned to working from home, fulfilment, logistics and transportation facilities are fully operational as the team continues to meet customers’ needs during these challenging times.
Through no-contact delivery, Wayfair is able to quickly and safely deliver necessary household staples such as mattresses, bedding, sheets, and towels, as well as basic kitchen and cookware items, large appliances, home office furniture, and children’s furniture and playroom products, to ensure that customers and their families are well equipped to spend more time at home.
Measures that Wayfair has instituted to combat the transmission of COVID-19 include:
- Wayfair has partnered with expert epidemiologists to implement preventative best practices throughout its operations that are in line with guidance from the Centers for Disease Control and Prevention (“CDC”).
- Wayfair introduced a no-contact delivery experience to keep drivers and customers safe. No signatures are required, delivery teams have been instructed to maintain a distance of six feet from customers, and hand washing or sanitizer use is mandatory between all deliveries.
- Across all facilities and delivery operations, Wayfair has significantly increased daily cleaning routines, including disinfection and cleaning of equipment, more frequent handwashing, and use of sanitizer. Wayfair has also begun to implement daily temperature checks at several locations with plans to roll out the practice further in the coming days.
- Policies and protocols have been implemented to help ensure that teams in fulfillment and transportation centers maintain proper social distancing. This includes staggering shifts to reduce overlap and placing limitations on the number of people allowed in common spaces.
- Wayfair has also rolled out emergency paid time off to enable team members who are not feeling well to stay home without losing pay. Additionally, the company has increased pay and introduced other incentives for hourly employees in fulfillment centers and home-delivery operations to recognize their ongoing contributions during this challenging time.
More background on the operational steps Wayfair is taking in light of COVID-19 can be found here.
Community Commitment
Wayfair is leveraging its core competencies and expertise to provide added support to the greater community.
More background on the community outreach that Wayfair, along with other large corporations, is doing in light of COVID-19 can be found here.
Business Performance
For its first quarter of 2020, Wayfair expects to meet or exceed its previously issued guidance of 15% to 17% consolidated net revenue growth year-over-year and consolidated Non-GAAP Adjusted EBITDA Margin in a negative 7.3% to 7.8% range.
Wayfair continues to see strong demand across most home goods categories in both its US and International segments. After entering the month of March with gross revenue growing at slightly below 20% year-over-year, consistent with January and February growth rates, Wayfair saw this rate of growth more than double towards the end of March. This run-rate has continued into early April.
Simultaneously, the company is accelerating its efforts to drive towards Non-GAAP Adjusted EBITDA profitability and materially improve its cash flow profile in 2020. Wayfair is making solid early progress against these initiatives, which are focused on driving leverage across all dimensions of its income statement including gross margin, advertising as a percent of sales, and the company’s operating expenses. Management will provide a full update on the company’s actions and outlook when Wayfair reports first quarter results on May 5th.
Liquidity Update
Wayfair is also taking steps to further strengthen its balance sheet and optimize its liquidity position to allow it to continue to serve customers from a position of operational and financial strength.
Today, Wayfair announced a private placement of convertible senior notes (the “notes”) in an aggregate principal amount of $535 million. Great Hill Partners and Charlesbank Capital Partners, two leading investment firms, led the transaction. One of Wayfair’s largest public shareholders, The Spruce House Partnership, also participated. The notes will bear interest, to be paid in kind, at an annual rate of 2.5% and feature a $72.50 conversion price, representing a 46% premium to the average closing price of Wayfair’s Class A common stock over the last 30 days. The notes will mature in five years, unless earlier redeemed, repurchased, or converted in accordance to their terms. The full details of the transaction will be made available in a subsequent Form 8-K filing.
Wayfair's share price rose by 41% on Monday following the update but year to date, the share price was still down by approximately 21%.
Recently, Wayfair reported significant revenue growth alongside losses of $330m.
Source : Wayfair and Insight DIY
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