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What Could Drive Wayfair’s Top Line in 2019?

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Expectations

Wayfair (W) is one of the fastest-growing online retailers in the US. Wayfair sells furniture and home decor through five different websites including Wayfair, AllModern, Joss & Main, Birch Lane, and Perigold.

For the fourth quarter of 2018, analysts forecast Wayfair’s revenue to rise 36.5% YoY to $1.96 billion. For 2018, analysts forecast revenue growth of 42.6% YoY to $6.73 billion. For 2019, analysts expect revenue to increase 31.4% to $8.84 billion on a YoY basis.

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For the fourth quarter of 2018, Wayfair’s management had forecast revenues of $1.92 billion–$1.97 billion. Out of total revenue, the direct retail net revenue for the holiday quarter is estimated at $1.91 billion to $1.95 billion, which reflects 34%–37% YoY growth. US direct retail revenue growth is projected to be 32%–35%. The international direct retail revenue growth is forecast at 50%–55%. Wayfair hasn’t provided an outlook for 2018.

Growth drivers

Wayfair’s top-line growth is being driven by its Domestic and International segments. It is expanding its operations in Canada, the United Kingdom, and Germany. Also, it has been adding more products to its outdoor, mattress, and bathroom vanity categories to capture a greater share of the market.

Wayfair is developing its logistics network to speed up delivery. The company is also ramping up its investment in advertisements. Additionally, to compete with other traditional retailers, Wayfair is experimenting with promotional events such as Way Day, which was held in the second quarter of 2018.

Wayfair is looking to drive more revenue from repeat customers because it can cut down on its advertisement expenses by increasing orders from repeat customers.

Expectations for peers

For fiscal 2018, analysts forecast Williams-Sonoma’s (WSM) sales growth to be 6.5% YoY to $5.64 billion. For Home Depot’s (HD) fiscal 2018, analysts project revenue growth of 7.3% YoY to $108.30 billion.

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