Dive Brief:
- After 9 quarters of consecutive revenue declines, Wayfair on Wednesday reported third-quarter net revenue increased 3.7% year over year to $2.9 billion. U.S. revenue was up 5.4% year over year to $2.6 billion, while international revenue fell 7% to $372 million.
- The online home goods retailer narrowed its losses in the quarter: Operating loss fell 59% year over year to $152 million, while net loss declined 42% to $163 million, according to a company filing.
- Active customers reached 22.3 million, a 1.3% decline from the year-ago period, a slight improvement from the 7.6% decline last quarter. CEO and co-chairman Niraj Shah said Wayfair is “well on its way” to seeing positive year-over-year growth in its active customers.
Dive Insight:
Increased orders helped boost revenues in Q3, reversing trends of declining sales in recent quarters.The retailer reported orders delivered in the third quarter increased 13.8% year over year to reach 9.9 million.
“Wayfair is now in a place where we can drive profitability while simultaneously investing for growth,” Shah said in a statement, noting that the company saw positive adjusted EBITDA of $100 million in Q3, net revenue gains and a second consecutive quarter of positive free cash flow. “Even with a turbulent macro, we remain committed to our profitability goals in good times and bad. We will continue to drive peerless focus and execution into 2024 and beyond, as we push every day to be the number one shopping destination for the home.”
The online home goods retailer — which along with its namesake brand, runs Joss & Main, AllModern, Birch Lane, Perigold and Wayfair Professional — was uniquely positioned to gain at the height of the pandemic, operating both online and in a category in high demand. In fiscal 2020, Wayfair reached its first annual net income since becoming a publicly traded company in 2014. But as demand for home goods began to wane, the company faced sales declines.
The year-over-year revenue gains in the quarter was a positive sign coming off of nine consecutive quarters of declines, but the 5.7% revenue decline compared to 2021 shows the retailer still has more work to do to recover from the dramatic drop in home goods demand over the past several years, according to GlobalData Managing Director Neil Saunders.
Average order value also declined in the third quarter, reaching $297 from $325 in the same period last year.
“[A]s the continued steep decline in the average order value shows, there are still challenges in the demand environment as a sluggish housing market and financial pressures both reduce the propensity to buy products for the home,” Saunders said in emailed comments. “This unfortunate backdrop will make continued advancement challenging, although not impossible, for Wayfair.”
This comes as competition in the home goods space heats up. While the bankruptcy of Bed Bath & Beyond provided some benefits to Wayfair, other retailers, like Ikea, have announced plans for further expansion.
