Dive Brief:
- Wayfair continued to face declines in the third quarter, reporting on Thursday that net revenue fell 9% year over year to $2.8 billion. The retailer’s U.S. revenue fell 6% from last year to $2.4 billion, while international revenue declined 24% to $400 million.
- As of Sept. 30, the online home retailer had 22.6 million active customers, down 22.6% from the year-ago period, according to a company press release. From Q2, Wayfair’s active customer base shrunk by 1 million, or more than 4%.
- Wayfair’s operating loss in the period swelled to $372 million from $70 million last year, while net loss grew to $283 million from $78 million. Gross profit was $824 million, or 29% of total net revenue, from $883 million last year.
Dive Insight:
As its losses widened, Wayfair’s revenues also continued to decline in the third quarter.
The online home retailer benefited in the early months of the pandemic as customers avoided stores for purchases and actively sought out goods for their homes, but has since faced declines as demand waned. And Wayfair’s revenue declines this quarter lap a period of already reduced demand following early pandemic highs. On a two-year basis, net revenue fell about 26%.
More recently, not only has demand shifted, consumers are now met with inflation and other economic pressures causing them to pull back on discretionary spending.
While inflation is affecting most retailers, Wayfair is hit particularly hard due to the fact that many consumers make impulse purchases at the retailer — which “are the first purchases to disappear when times become tight” — and that the company’s customers have been more affected by the current economic environment, according to GlobalData Managing Director Neil Saunders.
The company, which has failed to turn a profit every year but one — 2020 — sank deeper into the red in the third quarter. Operating loss for the year so far has already topped $1 billion from a profit of $102 million in the same period last year, while net loss year to date is $980 million from an income of $71 million last year.
