Wayfair (W) is slated to announce its second-quarter results on August 2. Analysts expect the company’s adjusted EPS to improve YoY (year-over-year) to -$0.73 from -$0.26, and its gross margin to contract YoY to 23.3% from 24%. They expect its operating expenses to rise 47.9% to $430.5 million, expanding its adjusted operating loss YoY to $62.9 million from $21.6 million. Its adjusted EBITDA margin is projected to be -2.1%.
Higher costs from ongoing investments in logistics, hiring, and marketing could boost Wayfair’s profitability and bottom line. Whereas Wayfair hasn’t provided bottom-line guidance for Q2 2018, it expects an adjusted EBITDA margin of -2.1% to -2.4%. In the long term, the company expects its gross margin to expand to 25%–27% due to cost savings from logistics efficiency and economies of scale.
Recap of past performance
In the first quarter, Wayfair’s adjusted EPS fell YoY to -$0.91 from -$0.48, and to -$1.22 from -$0.66 on a reported basis. Its gross margin narrowed by 160 basis points to 23.1%, and its operating expenses rose 45.7% YoY. Its operating loss expanded YoY to $103.1 million from $56.2 million, and its adjusted EBITDA margin was -3.6%. In comparison, analysts expect RH’s (RH) adjusted EPS to more than double YoY from $0.65 to $1.75 in Q2 2018, and Williams-Sonoma’s (WSM) to grow 13.1% YoY to $0.69.