Wayfair’s Q1 2025 Forecast: Steady Revenue Amid Strategic Changes
Wayfair (W) will report its first-quarter 2025 results on May 1. The company anticipates revenues to be flat to slightly negative compared to the previous year. The Zacks Consensus Estimate for first-quarter 2025 revenues is set at $2.71 billion, reflecting a 0.66% year-over-year decline.
Analysts expect a loss of 18 cents per share, which has improved by 1 cent in the last 30 days. This marks a notable improvement from a loss of 32 cents in the same quarter last year.
Wayfair’s earnings history shows mixed results. The company missed the Zacks Consensus Estimate in two of the last four quarters while surpassing expectations in the other two, totaling an average negative surprise of 320.11%.
Wayfair Inc. Price and EPS Surprise
This upcoming quarter shows some promising elements. Let’s explore the main aspects affecting Wayfair’s performance.
Key Factors Impacting Q1
Wayfair’s CastleGate fulfillment network has gained traction, driven by increasing demand for quick delivery and better customer experiences. About 90% of CastleGate orders now carry a “speed badge,” indicating faster delivery times. This has led to lower return rates and enhanced customer satisfaction. Additionally, the company has seen a more than 60% increase in supplier conversion rates due to one-day delivery options, positively impacting its performance for the first quarter of 2025.
In the fourth quarter of 2024, Wayfair boosted its advertising investments, carrying this strategy into early 2025. By concentrating on high-return channels, the company aimed to enhance customer acquisition and increase order volume. Given the lasting impact of these investments and early signs of improved engagement, Wayfair is likely to benefit from them in the upcoming quarter.
However, the company’s withdrawal from the German market in late 2024 may have negatively affected revenues by 100 basis points. This decision arose from ongoing struggles to scale market share and create sustainable unit economics, likely serving as a short-term challenge to overall revenue performance.
What Our Model Indicates
According to the Zacks model, a positive earnings ESP combined with a Zacks Rank of #1 (Strong Buy), #2 (Buy), or #3 (Hold) enhances the chances of an earnings beat. Currently, Wayfair possesses an earnings ESP of +7.88% and holds a Zacks Rank #3.
Stocks to Watch
Other companies worth considering that match the successful criteria for beating earnings in their upcoming releases include:
Alibaba (BABA) has an earnings ESP of +41.69% and a Zacks Rank #2. The Zacks Consensus Estimate for its fourth-quarter fiscal 2025 earnings stands at $1.48 per share, indicating an 8% increase in the last month and year-over-year growth of 5.71%.
Carvana (CVNA) reports an earnings ESP of +19.45% with a Zacks Rank #2. Its first-quarter 2025 earnings estimate is 73 cents per share, a 5.8% increase over the past month, reflecting a significant year-over-year growth of 278.05%.
On Holding (ONON) has an earnings ESP of +12.50% and a current Zacks Rank #2. The earnings estimate for the first quarter of 2025 is projected at 24 cents per share, remaining unchanged over the past month, but reflecting a year-over-year decline of 36.84%.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
