Wayfair (W 2.14%) shareholders lost ground to the market this week as the stock fell 2% through Thursday trading compared to a 0.4% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.
The decline added to significant short-term losses for owners of the online home furnishings giant, whose stock is down over 55% so far in 2022 compared to a 10% drop in the wider market. It was powered by concerns about Wayfair's ability to quickly return to growth following its pandemic-related slowdown.
Wayfair posted some head-turning operating results in earlier phases of the pandemic. Sales soared in 2020 and through most of 2021 as more spending shifted online and as consumers prioritized home furnishing.
But those trends started reversing themselves in late 2021, so that overall sales remained flat for the fiscal year. Investors are worried Wayfair will face even tougher conditions in the first half of 2022, considering the lack of financial stimulus payments this year and less consumer interest in buying home furnishings. To that end, Wayfair stock, along with several peers, was downgraded this week ahead of its upcoming earnings report.
Wayfair will announce its fiscal first-quarter results early on Thursday, May 5. CEO Niraj Shah and his team will update investors at that time about key challenges impacting the industry today, including inflation, supply chain struggles, and weakening demand.
Wayfair may affirm management's long-term target that currently sees annual sales growing toward $100 billion in several years. The company expects to win market share as more shopping shifts to online sales channels over that time.
However, the stock might remain pressured if Thursday's operating update implies a second consecutive year of roughly flat sales for the business, with revenue holding steady at about $14 billion since 2020.