Top Priority is to Serve and Support Customers,
Employees & Communities
Business Performance Remains Strong;
Accelerating Path to Profitability
Multiple Steps Taken to Further Reinforce
Liquidity, Including $535 Million Capital Raise
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.
The company has offered to support the Federal Emergency
Management Agency (“FEMA”) in New York and Massachusetts by
providing call center assistance, access to its logistics network
for storing and moving critical supplies, and Wayfair’s seamless
supply chain to provide much needed items such as mattresses,
linens, sheets and pillows for field hospitals.
In addition, Wayfair is working with the Boston Medical Center
to provide furnishings in a slated space for the homeless to
self-quarantine should they become infected. The company is also
making a $250,000 donation to a variety of employee-selected
charities to help those impacted by COVID-19.
Wayfair will postpone its annual Way Day celebration to a later
date. Instead, the company will host a special promotional event
during its second quarter to offer the best value to customers
during this time of need, and will donate a meaningful portion of
the proceeds to benefit the broader 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.
About Wayfair
Wayfair believes everyone should live in a home they love.
Through technology and innovation, Wayfair makes it possible for
shoppers to quickly and easily find exactly what they want from a
selection of more than 18 million items across home furnishings,
décor, home improvement, housewares and more. Committed to
delighting its customers every step of the way, Wayfair is
reinventing the way people shop for their homes – from product
discovery to final delivery.
The Wayfair family of sites includes:
- Wayfair - Everything home for every budget.
- Joss & Main - Stylish designs to discover daily.
- AllModern - The best of modern, priced for real life.
- Birch Lane - Classic home. Comfortable cost.
- Perigold - The widest-ever selection of luxury home
furnishings.
Wayfair generated $9.1 billion in net revenue for full year
2019. Headquartered in Boston, Massachusetts with operations
throughout North America and Europe, the company employs more than
16,000 people.
Forward Looking
Statements
This press release contains forward-looking statements within
the meaning of federal and state securities laws. All statements
other than statements of historical fact contained in this press
release, including statements regarding the strength of our product
offering, our future results of operations and financial position,
our business strategy and our plans and objectives of management
for future operations, are forward-looking statements. In some
cases, you can identify forward-looking statements by terms such as
"may," "will," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or
the negative of these terms or other similar expressions.
Forward-looking statements are based on current expectations of
future events. We cannot guarantee that any forward-looking
statement will be accurate, although we believe that we have been
reasonable in our expectations and assumptions. Investors should
realize that if underlying assumptions prove inaccurate or that
known or unknown risks or uncertainties materialize, actual results
could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on
any forward-looking statements. These forward-looking statements
speak only as of the date of this press release and, except as
required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements contained herein,
whether as a result of any new information, future events or
otherwise.
A list and description of risks, uncertainties and other factors
that could cause or contribute to differences in our results can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K and subsequent
filings. We qualify all of our forward-looking statements by these
cautionary statements.
Non-GAAP Financial
Measures
This release contains certain non-GAAP financial measures,
including Adjusted EBITDA, Adjusted EBITDA as a percentage of total
net revenue ("Adjusted EBITDA Margin") and free cash flow. We use
these non-GAAP financial measures internally in analyzing our
financial results and believe they are useful to investors, as a
supplement to GAAP measures, in evaluating our ongoing operational
performance.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP
financial measures that are calculated as loss before depreciation
and amortization, equity-based compensation and related taxes,
interest (expense), net, other (income) expense, net, provision for
income taxes, net, non-recurring items, and other items not
indicative of our ongoing operating performance. We have included
Adjusted EBITDA and Adjusted EBITDA Margin in this release because
they are key measures used by our management and our board of
directors to evaluate our operating performance, generate future
operating plans and make strategic decisions regarding the
allocation of capital. In particular, the exclusion of certain
expenses in calculating Adjusted EBITDA and Adjusted EBITDA Margin
facilitates operating performance comparisons on a period-to-period
basis as these costs may vary independent of business performance.
In the case of exclusion of the impact of equity-based compensation
and related taxes, excludes an item that we do not consider to be
indicative of our core operating performance. Investors should,
however, understand that equity-based compensation will be a
significant recurring expense in our business and an important part
of the compensation provided to our employees. Accordingly, we
believe that Adjusted EBITDA and Adjusted EBITDA Margin provide
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management and board of directors.
Free Cash Flow is a non-GAAP financial measure that is
calculated as net cash (used in) provided by operating activities
less net cash used to purchase property and equipment and site and
software development costs. We believe free cash flow is an
important indicator of our business performance, as it measures the
amount of cash we generate. Accordingly, we believe that Free Cash
Flow provides useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management.
We calculate forward-looking Adjusted EBITDA and Adjusted EBITDA
Margin based on internal forecasts that omit certain amounts that
would be included in forward-looking GAAP net loss. We do not
attempt to provide a reconciliation of forward-looking Adjusted
EBITDA and Adjusted EBITDA Margin guidance to forward looking GAAP
net loss because forecasting the timing or amount of items that
have not yet occurred and are out of the Company’s control is
inherently uncertain and unavailable without unreasonable efforts.
Further, we believe that such reconciliations would imply a degree
of precision and certainty that could be confusing to investors.
Such items could have a substantial impact on GAAP measures of
financial performance.
The non-GAAP measures have limitations as analytical tools. We
do not, nor do we suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP.
Investors should also note that the non-GAAP financial measures we
use may not be the same non-GAAP financial measures, and may not be
calculated in the same manner, as that of other companies,
including other companies in our industry.
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version on businesswire.com: https://www.businesswire.com/news/home/20200406005394/en/
Media Relations: Jane Carpenter, PR@wayfair.com Investor
Relations: Jane Gelfand, IR@wayfair.com
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