Dive Brief:
- As the home category continues to face challenges, Wayfair on Thursday reported second-quarter net revenue fell 1.7% year over year to $3.1 billion. The company’s U.S. revenue fell 2% to $2.7 billion, while its international revenue grew 0.3% to $387 million.
- The online home goods retailer was able to shrink its losses during the quarter, with operating loss falling 75% to $35 million and net loss shrinking 8.7% to $42 million, according to a company press release.
- Wayfair’s active customer base was largely flat from the year-ago period at 22 million, while net revenue per active customer over the last year was $540 compared to $545 in the second quarter of 2023.
Dive Insight:
Like many other retailers operating in the home category, Wayfair has faced challenges as consumers pull back on spending or divert their dollars elsewhere.
The segment has faced declines for months, falling 6.4% year over year in June, according to monthly data released by the U.S. Commerce Department’s Census Bureau.
Wayfair CEO and co-founder Niraj Shah likened what the sector is experiencing to the 2007 to 2008 financial crisis, pointing to the housing market, consumers overspending during the early months of the pandemic when demand was heightened and a slowing U.S. economy.
“Customers remain cautious in their spending on the home, and our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis,” Shah said in a statement.
On a call with analysts Thursday, the executive pointed to some bright spots during the quarter, including opening its first large-format store in May. Since opening, Shah said the Wilmette, Illinois, store's performance is “very encouraging,” and noted the majority of customers coming to the store are new Wayfair shoppers.
The store builds on the digitally native retailer’s recent ambitions of building out its physical presence after operating largely online. The company opened its first physical store in 2019 in the Natick Mall in Massachusetts, but shuttered that location about 18 months later. However, in 2021, Wayfair announced plans to open additional stores spanning across all of its brands, including AllModern and Joss & Main. The brand is now planning to open the first store dedicated to its Perigold brand next year, executives said Thursday.
Looking ahead, the company expects third-quarter revenue to be down in the low-single digits compared to last year. Still, Shah expressed optimism in the home category’s recovery.
“People still need mattresses, and tables and chairs. They still need desks and bathroom pictures and kitchen equipment, and at some point, we expect a reversion to the mean,” Shah said. “While we've yet to see the housing recovery, replacement for pandemic spending and broader economic upturn, we anticipate these drivers around the horizon. Given how deep we are into the cycle, it's fair to expect the turnaround to come soon, and Wayfair is well positioned to benefit as it does.”
