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(Bloomberg Opinion) -- Warren Buffett’s Berkshire Hathaway Inc. has $128 billion of cash. There is almost no purchase too large for the company — in fact, large is exactly what investors are waiting for. And yet, the only stock Berkshire bought last quarter was a dinky retailer, RH.Berkshire disclosed in a regulatory filing Thursday that it took a $212 million stake in RH, a California-based home-furnishings chain valued at $3.3 billion. Buffett could even buy the entire company and it’d still be a puny deal for him. But it was a big deal for RH, because the shares surged 9% in after-hours trading and held near that level early Friday morning.I admit I didn’t even recognize the retailer’s name at first. RH used to be called Restoration Hardware, a place that sells $6,000 linen sofas and elongated wooden dining tables with “forthright silhouettes.” The company shrank its name and supersized its stores, an effort to target a more upscale clientele. It’s even installed some on-site restaurants, a little nourishment to help one ponder a new addition to the ski house. That’s partly what makes RH such a funny investment for Buffett. Not only is the billionaire known for his down-to-earth lifestyle — he’s lived in the same fairly modest house for more than 60 years — but he’s also usually drawn to businesses that mirror the America he sees from his unassuming Omaha office: railroads, truck stops, Dairy Queens, the Nebraska Furniture Mart. Furthermore, Berkshire tends not to waste time on minority stakes in small, specialty chains; its only other retail holdings are Amazon.com Inc. and Costco Wholesale Corp., companies valued at $870 billion and $134 billion, respectively. RH was the only new position Berkshire took in the latest quarter, aside from buying common shares of Occidental Petroleum Corp., in which it already purchased $10 billion of preferred equity (part of a financing deal to assist the oil and gas explorer in its takeover of Anadarko Petroleum Corp.). All in all, it was another dull period for Berkshire, whose last splashy stock pick was Amazon earlier in the year. With U.S. equities still on the rise, Buffett, 89, and his investing deputies are struggling to find cheap candidates. Whoever made the call on RH — Todd Combs, Ted Weschler or the Oracle himself — he may have had prescient timing. At the end of May, RH’s price-to-earnings ratio hit a low, and the shares have doubled since then, taking a big leg up in September. That said, RH’s overnight gains drove the shares above analysts’ average target level, which is $181 apiece. “The business remains tough to predict and we believe expectations may now be somewhat elevated,” Bobby Griffin, an analyst for Raymond James & Associates who has the equivalent of a “hold” rating on RH, wrote in a Sept. 11 report, citing the China tariffs and a slowdown in high-end U.S. housing. Similarly, Gordon Haskett Research Advisors wrote to clients Sept. 10 that the firm finds other retailers such as Wayfair Inc., Williams-Sonoma Inc. and At Home Group Inc. more attractive. At the end of the day, though, no matter how RH performs, it won’t have much of an impact on Berkshire’s portfolio. Another quarter has passed without a major acquisition by Berkshire, its cash pile hitting a record yet again. RH may sell a $449 wool felt elephant, but it isn’t the kind of elephant Buffett is after. The wait continues.To contact the author of this story: Tara Lachapelle at firstname.lastname@example.orgTo contact the editor responsible for this story: Beth Williams at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Wayfair Inc. (NYSE:W), one of the world’s largest online destinations for the home, today introduced new features to its mobile shopping app that make it even easier for consumers to discover products and design their rooms on the go. With seamless access to simple and intuitive features including a breakthrough augmented reality (AR) tool, a central hub for all camera-based features and Room Planner 3D for mobile, home inspiration is within reach from anywhere as shoppers harness the power of innovative design tools - all from the Wayfair app.
Wayfair's (W) third-quarter revenues are driven by strong direct retail business across international regions. However, tariff-related volatility affects its earnings.
(Bloomberg Opinion) -- It has long been clear that the White House’s tariffs on billions of dollars’ worth of goods made in China were not going to be good for U.S. consumers or the retailers trying to get them to open their wallets. Exactly how bad, however, was hard to know.Now comes Wayfair Inc., the e-commerce home-goods site, with a kind of case study of their impact. Tariffs are hurting their business, executives said — not necessarily because they make their products more expensive, although they do, but because they make their customers more wary.Wayfair reported quarterly earnings on Thursday and forecast a significantly slower pace of sales growth next quarter than investors have become accustomed to. The company said that outlook in part reflected challenges related to tariffs, which jumped to 25% this summer on many of its products and had also created headwinds in the third quarter.On a conference call with investors, Wayfair executives said that certain items on their marketplace — some with a lot of customer reviews and enticing product images — have gotten more expensive as suppliers raise prices. This, it turns out, appears to be causing customers to spend more time deliberating over their purchases: Should they go with the highly rated but more expensive item? Or should they take a chance on something that’s cheaper but has fewer reviews?Executives also said that as suppliers of more expensive items saw their sales volume sink, they would sometimes cut prices. The result, they said, was a “repetitive cycle of volatility” as customers tried to figure out how to get the best value for their money.Wayfair leaders said this is consistent with what they’ve observed in their business over time: Any kind of significant price movement — even downward — results in consumers taking their time before clicking the buy button.Of course, not every consumer business will see the same dynamics as Wayfair. Home furnishings purchases are generally more carefully considered, because couches, coffee tables and the like are expensive and are a hassle to return. But fellow retailers (and Washington lawmakers) should nonetheless consider Wayfair’s a cautionary tale.The impact of tariffs on the consumer economy is often discussed rather simplistically: They will cause prices to rise, which means shoppers will buy less stuff. Wayfair’s experience shows it is more complicated than that. Yes, consumers will change their behavior, but not always in a straightforward or predictable fashion. And this uncertainty complicates the response for manufacturers, retailers and, not incidentally, consumer brands.Last week, for example, toy giant Hasbro Inc. saw its shares sink nearly 17% after it reported disappointing earnings that reflected tariff-related difficulty. Certain retailers canceled toy orders that were to be imported directly from China and instead put in orders as domestic shipments from Hasbro. The maker of My Little Pony and Play-Doh was left scrambling to accommodate the changes, and ultimately wasn’t able to ship all the orders in time.Few U.S. retailers and consumer brands will be able to escape the impact of President Donald Trump’s trade policy. At this point, the best they can do is to commit to being flexible — and to analyzing their data for the potentially weird ripple effects of tariffs.To contact the author of this story: Sarah Halzack at firstname.lastname@example.orgTo contact the editor responsible for this story: Michael Newman at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Wayfair Inc. plunged to its lowest levels of the year after the online home-goods retailer gave a disappointing outlook for the critical holiday quarter.The shares fell 17% to $84.23 at 12:32.m. in New York, their lowest since Dec. 26. The company said on its conference call with analysts and investors that it expects fourth-quarter net revenue of $2.48 billion to $2.525 billion, missing even the lowest of analyst estimates. Gross margin is expected to fall in the range of 23% to 24%, while analysts on average were looking for 24.1%.It had already been a rough week for Wayfair with the stock falling 14% over the past three days. Ahead of the results, Wedbush said investors were worried about the company’s profitability and growth outlook, and Credit Suisse cautioned about near-term tariff headwinds. On Thursday, the Boston-based company cited “some short-term tariff related volatility” in its earnings release. Wayfair’s gross margin trailed estimates in the third quarter, and its adjusted loss per share was wider than expected.Gordon Haskett downgraded its rating on the stock to hold from accumulate, saying despite an increased focus on profitability in retail and e-commerce, “Wayfair’s lack of urgency on this front is a bit perplexing.” There are also concerning signs that it’s getting more expensive for Wayfair to attract new customers, and there’s a bit of a slowdown in home-furnishing spending, analyst Chuck Grom wrote in a research note.Morgan Stanley’s Simeon Gutman said that while he expected a weaker fourth-quarter forecast, the magnitude of the slowdown is worse than anticipated. Recent high-profile but unprofitable initial public offerings are contributing to the market’s renewed focus on profitability, Gutman said.“The key question becomes how long W will have to endure top- and bottom-line headwinds before reaching an inflection point after which revenue growth re-accelerates and losses narrow,” Gutman wrote, referring to Wayfair by its stock ticker. “We have a relatively low level of confidence all of the issues W is contending with will be resolved in the next couple of quarters.”This week’s slump may pay off big for short-sellers like Citron Research’s Andrew Left. Bets against Wayfair are near the highest of the year, with short interest accounting for more than 27% of the available shares, according to financial analytics firm S3 Partners. Shorts have been on a rollercoaster ride after the stock’s early-2019 rally.(Adds downgrade in fourth paragraph, additional analyst comments in fifth and sixth.)\--With assistance from Bailey Lipschultz.To contact the reporters on this story: Catherine Larkin in Chicago at firstname.lastname@example.org;Courtney Dentch in New York at email@example.comTo contact the editors responsible for this story: Courtney Dentch at firstname.lastname@example.org, Scott Schnipper, Jennifer Bissell-LinskFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Wayfair (W) delivered earnings and revenue surprises of -4.70% and 1.17%, respectively, for the quarter ended September 2019. Do the numbers hold clues to what lies ahead for the stock?
Wayfair (W) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
Softness in adjusted OIBDA is likely to have hurt World Wrestling's (WWE) Q3 bottom line. However, efforts to expand original content, raise content rights fees and monetize video content bode well.
Wayfair (NYSE:W), one of the world’s largest online destinations for the home, today announced a partnership with Big Sister Association of Greater Boston that will bring a workplace mentoring program to Wayfair’s Boston-based headquarters aimed at building relationships between girls from Boston-area schools and Wayfair employees.
Wayfair (W) introduces a flagship brand, Hykkon, which offers over 700 products for the living room, dining room and bedroom. This is likely to aid growth in its European business.
Wayfair Inc., one of the world’s largest online destinations for the home, today unveiled Hykkon, a carefully curated collection of stylish yet timeless home furnishings to help customers discover exciting design at an affordable price. Hykkon is the first flagship brand for Wayfair’s European business and launched today across Wayfair.co.uk and Wayfair.de. “We’re thrilled to launch our first flagship brand across Wayfair Europe, which gives our customers premium access to an in demand, modern assortment at an affordable price point,” said Martin Reiter, Head of Europe, Wayfair.
Wayfair (NYSE:W), one of the world’s largest online destinations for the home, announced today the winners of the Dream Classroom Giveaway, a contest awarding five teachers across the United States with brand-new classroom furniture, storage, and décor. Conducted by Wayfair Professional, Wayfair’s business program, nominations from the public were accepted through a contest website earlier this year. “We’re thrilled to announce the Dream Classroom Giveaway winners.
Wayfair Inc. , one of the world’s largest online destinations for the home, today announced that it will release financial results for its third quarter ended September 30, 2019 before the opening of the market on October 31, 2019.
(Bloomberg) -- After Lee Bird witnessed At Home Group Inc. lose half its market value in one day this June, the chief executive officer decided to reconsider everything.“This past 90 days has been a revisit of our whole business,” Bird said in an interview. “We obviously lost the faith of our investors.”In response, the home-goods retailer pulled back on its ambitious store-opening plans and revamped marketing to tout what it claims are the lowest prices in the industry. And after staying out of the e-commerce fray because the cost of implementation and shipping could hamper profit, the company now plans a full online offering by 2022.The efforts come none too soon, as a shakeout in retail has left legacy chains struggling to survive the arrival of digital-first competitors like Amazon.com Inc. and Wayfair Inc. Consumers at all income levels are also more discount-oriented, using the internet to seek out deals. At Home appeared immune to these woes until June 6 when weak sales and increased costs from President Trump’s tariffs on Chinese goods led to a cut in its earnings forecast that hammered the stock.“A long list of little things have gone against the company,” said Brad Thomas, an analyst at KeyBanc Capital Markets. “A few have been company specific, but it’s more about housing slowing down about a year ago.”At Home also had little room for error, with its valuation soaring after revenue gained an average 23% annually over the past three years. But investors bolted after the company’s same-store sales fell the past two quarters -- the first declines since going public three years ago. The company’s earnings have also missed analysts’ projections twice in the past three quarters.“It’s hard, but I get paid a lot of money so no one is going to tear up for me,” said Bird, who bought $500,000 worth of shares on Monday.The stock had declined 54% this year through Tuesday’s close. Just a year ago, the retailer sold additional stock to the public for $33.20 a share. The shares climbed as much as 7% to $9.16 on Wednesday, their fourth straight daily gain. The increase in value-driven shoppers should put At Home in a solid position. Much like Costco Wholesale Corp., the chain has a low-cost operating model -- it opens stores cheaply in locations vacated by the likes of Sears and about 70% of its inventory is private label or exclusive.Pricing ModelThat helps the retailer keep prices low, but not enough shoppers were getting the message because of “all the noise” on discounts and deals coming from competitors, Bird said. At Home uses a pricing model of everyday low prices -- a strategy popularized by Walmart Inc. that eschews promotions and instead tries to convince shoppers of constant value. Meanwhile, most retailers employ a model of high introductory prices and then discounts.“The average American is not aware that At Home is a low-price leader,” KeyBanc’s Thomas said.To help remedy this, At Home for the first time is running regular shopping events every two weeks, often tied to seasonal events. There’s currently a focus on fall decor on its website and in stores. A year ago, the chain would have been highlighting a few specific deals, but not a whole category. Early results are that it’s lifted sales, Bird said.Besides opening stores, revenue gains will also come from its first push online, he said. In the fourth quarter, the company will test letting customers buy items online and picking them up at stores. If all goes well, more locations will be added next year, with the goal of shipping purchases to customer’s homes from locations by 2022, he said.Despite the turmoil, the company still sees growing to 600 stores from 200 in the U.S. But it will get there at a slower pace, expanding 10% a year, down from a current rate of 17%. That means it would take more than a decade to reach that goal.“We know we have a huge white space in front of us,” Bird said. “I feel good about the adjustments we’ve made.”(Updates with share trading Wednesday in eighth paragraph. A previous version was corrected to show about 70% of inventory is private label or exclusive.)To contact the reporter on this story: Matt Townsend in New York at email@example.comTo contact the editors responsible for this story: Anne Riley Moffat at firstname.lastname@example.org, Lisa Wolfson, Jonathan RoederFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.