Why Wayfair Stock Popped Today
Key Points
Wayfair is growing faster than the overall home goods industry.
The company's margins are expanding as customers spend more on its websites.
- 10 stocks we like better than Wayfair ›
Shares of Wayfair (NYSE: W) soared on Tuesday after the online marketplace for furniture and other home goods delivered its fastest pace of growth since the early stages of the pandemic.
Image source: Getty Images.
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Winning more market share
Wayfair's active customers grew 3.3% year over year to 21.7 million as of June 30.
These shoppers also spent more on its e-commerce platform. Average order value increased to $332 from $328 in the year-ago quarter, while trailing-12-month revenue per active customer climbed 4.2% to $596.
In all, Wayfair's total net revenue rose 7.5% to $3.5 billion in the second quarter.
"Revenue growth in the U.S. was the best we've seen in the entire post-COVID period, with nearly 9% year-over-year revenue growth, continuing the high-single-digit share spread we've held since last fall," CEO Niraj Shah said.
Shah went on to state that the company's luxury home furnishings and decor brand, Perigold, and other specialty brands were helping to drive its market share gains.
"We saw noteworthy outperformance from our specialty retail brands, which grew by nearly 20% in the second quarter, and Perigold, which grew by more than 35%," Shah said.
All told, Wayfair's adjusted earnings jumped 9% to $0.95 per share. That bested Wall Street's estimates, which had called for per-share profits of $0.92.
Wayfair also generated an impressive $301 million in free cash flow.
Management sees more gains ahead
During a conference call with analysts, chief financial officer Kate Gulliver said she expects Wayfair to deliver high-single-digit revenue growth in the third quarter, with continued margin expansion and robust free cash flow.
"We are operating from a position of strength, expanding our competitive moats and driving durable, highly profitable growth, which can compound for the long term," Gulliver said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Wayfair. The Motley Fool has a disclosure policy.
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