If you hear Wayfair executives roaming the halls of the company’s Boston headquarters singing “Yesterday” under their breaths, you can’t really blame them. During the height of the pandemic, the online home furnishings giant recorded its first profits ever, as top-line revenues nearly hit triple-digit gains with massive increases in customer counts and order sizes.
Post-pandemic, not so much.
In reporting its second-quarter numbers Thursday morning, Wayfair continued to slide in virtually every financial metric: top-line revenue down 14.9 percent; net losses of $378 million; active customers down 24.1 percent; and a 28.2 percent drop in delivered orders. Retail expert Steve Dennis put it aptly—if not kindly—in a LinkedIn post referring to Wayfair as “Waywork, I mean, Wefair, sorry.”
Wayfair, of course, doesn’t see it quite that way, and on the earnings call, CEO Niraj Shah tried to put a bright spin on the dim results: “During a difficult macroeconomic environment, we remain squarely focused on our customers and our suppliers, and on making sure Wayfair is their preferred platform for the home. We are tightly controlling our many levers and steering Wayfair in a financially responsible manner through this period.”
In fairness, not all the news from Wayfair was terrible. Net quarterly revenue per active customer was $537, up 12.3 percent year over year, while the average order was $330 compared to $278 for the same period a year ago.
What’s more, Wayfair isn’t alone—its results fit a widespread pattern among home-centric retailers. Bed Bath & Beyond reported a disastrous quarter in late June, with its sales down more than 20 percent, resulting in the firing of both its CEO and chief merchant. Overstock, which is in the midst of a strategic transition to exclusively sell home furnishings online, saw its quarterly revenue drop 33.5 percent (although it did show a small profit). Higher up the luxury mountain, RH, while still showing gains in its performance, has more recently warned that it foresees a slowdown.
Naturally, Wayfair’s decline has dragged its stock price down considerably. A year ago, when the company was flying high, its share price topped $311 but has been in a steady drop ever since, and as of Thursday morning was trading at about $63 a share. Still, that’s up considerably from a week ago, when the price dipped to $45, a shift that could indicate investors believe Wayfair is bottoming out on its troubles, albeit slowly.
Certainly, company executives believe so. “Course-correcting a company of Wayfair’s size in an environment that is changing as rapidly as this one requires some patience,” said Michael Fleisher, Wayfair’s finance chief, on this morning’s call.
Still, he added, “to be perfectly blunt, we are not satisfied with this outcome.”
Homepage photo: Shutterstock