Dive Brief:
- Wayfair on Thursday reported total net revenue in the first quarter fell 1.6% year over year to $2.7 billion, with U.S. net revenue falling 1% to $2.4 billion and international revenue declining 5.8% to $338 million.
- The retailer narrowed both its operating loss, which was $235 million, and its net loss, which was $248 million, in Q1, according to a company press release.
- Active customers during the period reached 22.3 million, up 2.8% year over year. Net revenue per active customer as of March 31 was $537, a decline of 2.8% from the year-ago period.
Dive Insight:
Wayfair executives remained upbeat in discussing the company’s Q1 results despite challenges in the overall home goods sector.
“The first quarter ended on an upswing, as we saw the category show signs of improvement in late February and March following a challenging start to the year with our own topline results also reflecting this improvement,” CEO Niraj Shah said on a call with analysts Thursday.
Wayfair, like many others in the home goods sector, have faced declining demand following a spike during the pandemic. The furniture and home furnishings sector has seen year-over-year declines for months, with sales in the category falling 8% in March, according to data released by the U.S. Department of Commerce’s Census Bureau.
“We know there is a lot of attention around when we will finally see some stability in spending on home furnishings. And, while the timing of the inflection point is inherently uncertain, it’s important to remember that this is a category where consumers have now structurally underspent compared to typical patterns prior to the pandemic,” Chief Financial Officer Kate Gulliver said on the call. “We know that eventually the need reverts as life goes on. People get married. They have kids. Kids move out. The need for home furnishings never goes away, and over time, the category will rebound and return to its typical pattern of growth.”
To support the anticipated increase in demand, Wayfair in March refreshed its brand through a campaign dubbed “Welcome to the Wayborhood.” The company released a new logo and updated jingle, and it introduced new celebrity partners, including Lisa Ann Walter, Lisa Vanderpump and Tituss Burgess.
While advertising expenses declined slightly from the year-ago period, they still came in at $324 million, representing nearly 12% of Wayfair’s revenue in the first quarter.
The company is also preparing to open its first large-format store later this month in Wilmette, Illinois. The store spans 150,000 square feet, compared to its other stores, which range in size from 8,000 to 15,000 square feet. The large-format store comes after the company in 2021 announced a series of openings spanning across all five of its brands.
For the quarter ahead, Wayfair expects sales to be flat to slightly positive and gross margin to be between 30% and 31%, according to Gulliver.