Wayfair Poised For Q2 Sales Beat On Strong Inventory, Vendor Promotions

Wayfair (NYSE:W) is gearing up to release its second-quarter earnings before the market opens on August 4, with expectations of surpassing Street estimates for both sales and profitability.

On Monday, Bank of America Securities analyst Curtis Nagle reiterated a Neutral rating on Wayfair, setting a price forecast of $60. Nagle’s projection of $3.15 billion in second-quarter sales surpasses the Street’s consensus of $3.12 billion.

This more bullish outlook is attributed to stronger-than-expected industry trends, increased inventory availability driven by higher utilization of Wayfair’s CastleGate system, and effective vendor-funded promotions.

Also Read: Wayfair Stock Rises After Surprise Q1 Profit and Higher Sales Beat Expectations

The analyst’s EBITDA estimate of $153 million also exceeds the Street’s $146 million, fueled by expectations of higher gross profit dollars due to greater flow-through and leverage from Selling, Operations, Technology, General & Administrative expenses, particularly from a right-sizing of the company’s tech headcount.

Supporting these positive trends, Bank of America’s aggregated credit and debit card data indicated a slight improvement in online furniture spending, which declined by 0.8% year-over-year in the second quarter, compared to a 1.6% decline in the first quarter.

Nagle suggests that these improving trends could signify a pull-forward in demand and increased promotional spending, although this might potentially come at the expense of industry sales later in the year.

He further noted that accelerating web and app trends suggest Wayfair is continuing to gain market share, driven by better product availability and vendor-funded promotions. Consequently, Nagle raised his second-quarter sales estimate by 1% to $3.15 billion and his EBITDA estimate by 2%.

Looking ahead to the third quarter, Nagle also increased his sales estimate by 1% to $2.86 billion, which aligns closely with the Street’s estimate of $2.87 billion.

This adjustment reflects the better-than-expected performance of consumer spending and the broader furnishings category. Furthermore, concerns regarding tariffs appear to be easing following Vietnam’s trade deal, despite an August 1 deadline.

The extended Black Friday in July event also indicates a healthy supply on the site, likely as vendors increasingly leverage CastleGate. Nagle sees this event as an additional opportunity for Wayfair to drive incremental sales. However, he maintained his fourth-quarter estimates, primarily due to tougher year-over-year comparisons.

While tariff concerns are abating, they remain a significant point of discussion for Wayfair. As such, topics on the upcoming earnings call are likely to revolve around the potential impact of tariffs on second-half 2025 trends and how vendors are navigating these challenges, particularly through CastleGate, vendor-funded promotions, and renegotiations. Nagle observed that the current share price already reflects the potential upside from easing tariffs and healthy supply trends.

Price Action: Wayfair shares are trading lower by 1.51% to $55.59 at last check Monday.

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