Wayfair Plunges After Coronavirus Hits Supply Chain in China

(Bloomberg) -- Wayfair Inc., which relies on China for half of its products, fell the most ever after saying its quarter-to-date revenue growth is trending just under 20%, well below historical rates.

If that growth rate tracks through the rest of the quarter, it would be the slowest growth in its history as a public company, according to data compiled by Bloomberg. Wayfair expects first-quarter net revenue in the $2.235 billion to $2.275 billion range, the company said on its earnings call. That compares with the average analyst estimate of estimate $2.47 billion and is below the low end of analyst expectations.

Wayfair said its forecast doesn’t factor in any significant impact from the virus, although it’s seeing some disruptions in the supply chain. The Boston-based online furnishings retailer also reported a wider-than-expected loss in the fourth quarter, while net revenue narrowly beat estimates.

The shares fell as much as 26% on Friday. The stock had already lost 22% this year, compared with a 5.8% decline in the Russell 1000 Consumer Discretionary Index.

Wayfair issued additional guidance on its earnings call:

  • Sees first-quarter adjusted Ebitda margin in the negative 7.3%-7.8% range
  • Sees first-quarter U.S. revenue growth 14%-16%, sees international growth 22%-25%
  • Sees more consistent positive adjusted Ebitda in the U.S. sometime in 2021
  • Said it’s confident in its long-term gross margin targets
  • Capex to remain elevated in first quarter at 5%-5.5% of sales

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