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abnormal, aforementioned, arrangement, ascribed, checking, classification, contract, correct, criteria, Dawn, declared, deemed, defense, deleverage, dividend, error, February, impairment, inaccurate, incorrectly, instruction, issuance, met, Nachiappan, Phillipson, qualitatively, quantitatively, readily, strength, Venkat, written
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affirmatively, apply, closed, comply, consulting, delay, earlier, emerging, enable, expanding, extended, footprint, forward, goodwill, irrevocably, opt, pandemic, private, relocation, shrinkage, transition, vary
Financial report summary
?Competition
Wayfair Inc - Ordinary SharesRisks
- We may incur operating losses in the future, and may not achieve or maintain profitability in the future.
- We have experienced fluctuations in the growth rate of our business and our high rates of growth in terms of revenue, earnings and margins may not be sustained in future time periods.
- We depend on our ability to purchase quality merchandise in sufficient quantities at competitive prices, including products that are produced by specialty and artisan vendors. Any disruptions we experience in our ability to obtain quality products in a timely fashion or in the quantities required could have a material adverse effect on our reputation, business, results of operations and financial performance.
- Disruption in our receiving and distribution system or increased costs as a result of our recently opened distribution and manufacturing centers could adversely affect our business.
- We are subject to import and other international risks as a result of our reliance on foreign manufacturers and vendors to supply a significant portion of our merchandise.
- Changes in the health of the high-end housing market, as well as declines in consumer confidence and consumer spending, could adversely impact our revenue and results of operations.
- We are exposed to risks associated with the interruption of supply and increased costs as a result of our reliance on third-party transportation carriers for shipment of our products.
- Increased commodity prices or increased freight and transportation costs could adversely affect our results of operations.
- Our business has been and may continue to be affected by the significant and widespread risks posed by an outbreak of infectious disease, such as the COVID-19 pandemic.
- We have identified material weaknesses in our internal control over financial reporting. If our remediation of these material weaknesses is not effective, or if we identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting in the future, we may not be able to report accurately or timely our financial condition or results of operations, which may adversely affect investor confidence in us, and as a result, the value of our Class A common stock.
- The failure to recruit, hire, and retain qualified personnel could materially adversely affect our business.
- We depend on our management’s and other team members’ experience and knowledge of our industry; we could be adversely affected were we to lose, or experience difficulty in recruiting and retaining, any such members of our team.
- We have and will continue to incur capital expenditures for the remodeling of our existing Showrooms, and there is no guarantee that this will result in incremental Showroom traffic or sales, which may adversely impact our results of operations and financial performance.
- Merchandise purchased from our vendors that is defective or otherwise does not meet our product quality standards could damage our reputation and brand image and harm our business, and we may not have adequate remedies against our vendors for such merchandise.
- Our continued success is substantially dependent on our positive brand identity.
- Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties.
- We rely on third parties to drive traffic to our website, and these providers may change their algorithms or pricing in ways that could negatively impact our business, results of operations, financial condition and prospects.
- From time to time we are subject to client or other various legal proceedings which could adversely affect our business, financial condition, results of operations and cash flows.
- Our failure to successfully manage the costs and performance of our print media might have a negative impact on our business.
- Our failure to successfully anticipate merchandise returns might have a negative impact on our business.
- Product warranty claims could have a material adverse effect on our business.
- If we are unable to successfully adapt to client shopping preferences or develop and maintain a relevant and reliable omni-channel experience for our clients, our financial performance and brand image could be adversely affected.
- Our future growth depends on our ability to successfully implement our organic growth strategy, a major part of which consists of opening new Showrooms. We may be unable to successfully open and operate new Showrooms, which could have a material adverse effect on our business, financial condition, operating results and prospects.
- Our ability to attract clients to our Showrooms depends heavily on successfully locating our Showrooms in suitable locations. Any impairment of a Showroom location, including any decrease in client traffic, could cause our sales to be lower than expected.
- Our estimated addressable market is subject to inherent challenges and uncertainties. If we have overestimated the size of our addressable market, our future growth opportunities may be limited.
- We operate in a highly competitive industry sector which may adversely affect our future financial performance.
- Our lease obligations are substantial and expose us to increased risks.
- Growing our business may require additional capital, and if capital is not available to us, our business, operating results and financial condition may suffer.
- Disruption in the financial markets could have a material adverse effect on client demand and our ability to refund client deposits.
- Our business operations depend on good relations with our employees.
- If we are unable to effectively manage our eCommerce business and digital marketing efforts, our reputation and operating results may be harmed.
- Material damage to, or interruptions in, our information systems as a result of external factors, staffing shortages, cyber risk, or difficulties in updating our existing software or developing or implementing new software could have a material adverse effect on our business or results of operations, and we may be exposed to risks and costs associated with protecting the integrity and security of our clients’ information.
- Our failure to address risks associated with payment methods, credit card fraud and other consumer fraud, or our failure to control any such fraud, could damage our reputation and brand and could harm our business, results of operations and financial condition.
- We are required to comply with payment card network operating rules and any material modification of our payment card acceptance privileges could have a material adverse effect on our business, results of operations, and financial condition.
- We may not be able to adequately protect our intellectual property rights.
- The inability to acquire, use or maintain our marks and domain names for our sites could substantially harm our business and operating results.
- If third parties claim that we infringe upon their intellectual property rights, our operating results could be adversely affected.
- We are subject to governmental regulations and may be subject to enforcement if we are not in compliance with applicable regulation, and changes in laws could make conducting our business more expensive or otherwise change the way we do business.
- Expectations of our company relating to corporate responsibility factors may impose additional costs and expose us to new risks.
- We are party to a revolving credit facility that contains covenants, which may restrict our current and future operations and could adversely affect our ability to execute our business needs.
- We may be unable to secure additional financing on favorable terms, or at all, to meet our future capital needs, which in turn could impair our growth.
- The dual class structure of our common stock has the effect of concentrating voting power with John Reed (our “Founder”) and (i) the Reed 2013 Generation Skipping Trust, which is an irrevocable trust and of which Messrs. Adams and Beargie are trustees and (ii) the 2018 Reed Dynasty Trust, which is an irrevocable trust and of which Messrs. Adams and Beargie are trustees (collectively, the “Founder Family Trusts”), which gives our Founder and the Founder Family Trusts substantial control over us, including over matters that require the approval of stockholders under our certificate of incorporation and applicable law or stock exchange rules, and their interests may conflict with ours or those of our stockholders.
- The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
- Delaware law may protect decisions of our Board of Directors that have a different effect on holders of our Class A common stock and Class B common stock.
- The market price, trading volume and marketability of our Class A common stock may be significantly affected by numerous factors, some of which are beyond our control.
- Our anti-takeover provisions could prevent or delay a change in control of the Company, even if such change in control would be beneficial to our stockholders.
- We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.
- Our director who has a relationship with Freeman Spogli & Co. may have a conflict of interest with respect to matters involving us.
- We no longer qualify as an “emerging growth company” within the meaning of the Securities Act and in the future will be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and additional disclosure obligations.
- We are a “controlled company” within the meaning of Nasdaq rules and qualify for and may rely on exemptions from certain corporate governance requirements.
- Future sales of shares of Class A common stock, or the perception in the public market that such sales may occur, could adversely affect the market price of our Class A common stock. Our stockholders could be diluted by such future sales and be further diluted upon the conversion of Class B common stock into Class A common stock.
- If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our Class A common stock adversely, our stock price and trading volume could decline.
- Delaware law and our corporate organizational and governing documents impose various impediments to the ability of a third party to acquire control of us, which could deprive our investors of the opportunity to receive a premium for their shares.
- Our operations present risks which may not be fully covered by insurance.
- As a public reporting company, we are subject to the Nasdaq rules and the rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results, or report them in a timely manner.
- We incur significant costs as a result of operating as a public company.
Management Discussion
- Net revenue increased $58.8 million, or 4.8%, to $1,287.7 million in 2023 compared to $1,228.9 million in 2022. The increase was driven primarily by increased demand for our products in both Showrooms and eCommerce channels, as well as elements of our supply chain continuing to catch up with client demand.
- Comparable growth was 1.4% in 2023 compared to 51.6% in 2022. Demand comparable growth was 7.6% in 2023 compared to 13.8% in 2022.
- Gross margin increased $15.3 million, or 2.9%, to $540.4 million in 2023 compared to $525.1 million in 2022. The increase was driven by the increase in net revenue, partially offset by increased expense related to the higher net revenue, including $16.1 million of higher product costs, $10.6 million of increased Showroom costs, $9.8 million of increased transportation costs and $3.6 million of higher credit card fees related to higher demand during these time periods.