Dive Brief:
- Wayfair on Thursday reported fourth-quarter revenue inched up 0.4% year over year to $3.1 billion. In the U.S., revenue grew 0.9% from the year-ago period to $2.7 billion, while international revenue fell 2.7% to $404 million.
- The online home goods retailer narrowed its losses in Q4, reporting an operating loss of $172 million from $330 million last year and a net loss of $174 million from $351 million.
- For all of 2023, which the company calls the “Year of the Reset,” Wayfair reported net revenue fell 1.8% year over year to $12 billion, with U.S. revenue increasing 0.2% and international revenue falling 13.3%. While losses overall shrank, net loss was $738 million and operating loss surpassed $800 million.
Dive Insight:
While Wayfair hasn’t reverted to sales declines yet, growth is slowing.
Q4’s modest 0.4% gain is a marked slowdown from the third quarter when the company reported net revenue increased 3.7% year over year following nine consecutive quarters of declines. On a two-year basis, Wayfair’s Q4 revenue declined 4.2%.
“For a company that desperately needs to grow sales to try and help bolster the bottom line Wayfair continues to head in the wrong direction,” Neil Saunders, managing director at GlobalData, said in emailed comments.
Wayfair, however, grew its active customer base in the fourth quarter to 22.4 million, a 1.4% increase from last year and a 0.4% increase from the previous quarter.
The company over the past year has been seeking ways to cut costs, namely in layoffs, as it works toward reaching profitability. At the start of 2023, Wayfair laid off nearly 2,000 employees, or 10% of its global workforce, with about 1,200 of those affected being corporate employees. Those job cuts followed another round in August 2022, impacting 870 employees, or 10% of its corporate staff. Layoffs continued into 2024, with the retailer in January letting go of about 1,650 employees, representing about 19% of its corporate team and 13% of its global workforce.
“While it is early, it does seem like we are getting more done, and faster, and at a lower cost. It also feels like we have the right level leaders in charge of the right things,” Wayfair co-founders Niraj Shah and Steve Conine said in a shareholder letter Thursday.
The retailer is working to improve its sales and profitability as the home sector overall remains challenged. The category has seen consistent declines throughout 2023 and continuing into 2024 as the furniture and home sector fell 7.5% year over year in January, according to numbers released by the U.S. Department of Commerce earlier this month.
At the same time, Wayfair is facing increased competition as retailers like Ikea and Walmart plot expansions in the U.S., Saunders noted.
“This, in our view, will be a major future threat that could dampen growth even as the market picks up,” he said.
