Personal Finance

6 Key Metrics From Wayfair's Big Holiday Quarter

A furnished living room, with a coffee table, large sofa, rug, and lamp

The online market for home furnishing products is thriving. Wayfair (NYSE: W) , one of the biggest players in this young niche, recently announced fourth-quarter results that blew past management's forecast due to strong demand across its retailing network.

Investors reacted harshly to the report, as net losses mounted . However, Wayfair made solid progress in its major operating goals.

Below are a few of the standout metrics from Wayfair's holiday-quarter report.

A furnished living room, with a coffee table, large sofa, rug, and lamp

Image source: Getty Images.

48%: Revenue growth

Sales jumped 48% to outpace the broader industry by a wide margin. , in comparison, posted a 35% increase in product sales over the same period. Wayfair's management had predicted a more modest gain, saying in early November that revenue would rise by 40% over the holidays.

Growth came from a healthy mix of increased order volume and higher average spending. Wayfair processed 6.2 million orders, up 31% year over year, as average order value rose to $229 from $203.

11 million: Customer base

The active customer base reached 11 million, which is a 33% increase over the previous year and a 7% uptick from the prior quarter. More of those customers represent repeat business, too.

Chart showing an increasing customer base.

Image source: Wayfair investor presentation. Customers, in millions, by quarter.

Image source: Wayfair investor presentation. Customers, in millions, by quarter.

Orders from repeat shoppers accounted for 3.9 million deliveries, or 62% of the total, up from 61% last quarter and 58% a year ago.

60%: Portion of heavy deliveries handled by Wayfair's network

Wayfair has been pouring resources into building out its own supply network so that bulky items like furniture and mattresses can be delivered more quickly and efficiently. Executives estimate that their network has slashed delivery times from as much as three weeks for items like rugs and hot tubs to a little over one week today.

A woman signs for a delivery package.

Image source: Getty Images.

As a result, the company was able to process sofa orders at a pace of one every 13 seconds on Cyber Monday. Those were just a few of the large and heavy items Wayfair sold over the holidays, including large appliances and pool tables.

23.3%: Gross profit margin

Gross profit margin ticked down to 23.3% of sales, reflecting both a competitive market and Wayfair's focus on building up its customer base. For the full year, gross profitability held steady at 24% for the third consecutive year. Management hopes to raise this metric to between 25% and 27%, but investors haven't yet seen evidence of success on this score.

11.5%: Advertising expenses

Wayfair spent slightly less on advertising than the 11.8% that management had projected. That's a good sign for the long-run health of the business, given the robust sales growth in the quarter. Advertising spending is still far above management's long-term goal of about 7% of sales, though.

$73 million: Net loss

Wayfair is far from achieving profitability, and in fact the company took a step deeper into the red this year, as net losses rose to $245 million from $194 million in the prior year. The business is also lagging on management's preferred metric of adjusted earnings, which amounted to a 1.4% loss compared to their goal of consistently producing profits of between 8% and 10% of sales.

CEO Niraj Shah and his team appear happy to trade that weak financial performance for big market share gains and a steadily expanding base of loyal customers. These assets should prove valuable as the industry matures and Wayfair begins capitalizing on its prime position over the years to come.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AMZN and Wayfair. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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