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Wayfair Says Business Is Booming Amid Coronavirus; Shares Surge

By John Rosevear – Apr 6, 2020 at 11:07AM

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March was a great month for the online home-goods retailer.

What happened

Shares of Wayfair (W 4.79%) opened sharply higher on Monday, up 35.5% as of 10 a.m. EDT, after the company said in a statement that its business is booming right now, despite the coronavirus -- and that it has raised an additional $535 million to bolster its balance sheet. 

So what

Here are the key points from the statement Wayfair released on Monday morning:

  • Business picked up -- way up -- after most brick-and-mortar retailers closed in mid-March. Wayfair said that at the beginning of March, its gross revenue was growing at just below 20% year over year, as it had in January and February, but that rate more than doubled by the end of the month, and it has stayed at that level into April.
  • The company expects to meet or exceed its previous first-quarter guidance for revenue growth and margins.
  • Wayfair has raised $535 million via a private placement of convertible notes. The notes pay 2.5% and can be converted to stock at $72.50 per share. (That's not much above the levels we saw on Monday morning, but it's a 46% premium to the average closing price of Wayfair's Class A shares over the past month.) The notes will mature in five years. 
A living room staged with Wayfair's furniture and home goods.

Image source: Wayfair.

Wayfair also said that it has implemented new policies -- including "no-contact" deliveries -- to protect its fulfillment and logistics teams from the COVID-19 illness, and that it has made a series of donations of time and money to coronavirus-related causes in Massachusetts (its home state) and New York. 

Now what

Wayfair, like other retailers' stocks, has been hit hard since the the extent of the coronavirus pandemic started to become clear in March. But unlike most of its rivals, Wayfair has only a tiny brick-and-mortar presence: just two stores, one of which is an outlet. Nearly all of its business is online, and while investors have had big questions around how much consumers would be wiling to spend online while stuck at home amid uncertainty, Wayfair's statement on Monday morning provided a surprising answer.

The company will report its first-quarter earnings results on May 5. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Wayfair. The Motley Fool has a disclosure policy.

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