Wayfair on Thursday reported second quarter net revenues declined 10.4% year over year to $3.9 billion, below Wedbush (down 10%) and consensus estimates (down 8%). Its U.S. revenue fell 15.2% from last year to $3.1 billion, while its international revenue rose 16.3% to $800 million.
The online home goods retailer's net customer base grew 19.6% to 31.1 million, but was below the previous quarter's figure of 33.2 million active customers, according to a company press release.
Operating income during the period fell 51.6% to $145.2 million, while net income declined 52.4% to $130.4 million.
The home took on a whole new meaning last year. For some, it became the office, school or place for nearly every other recreational activity. Consumers, largely confined to their houses, began buying more home-related items to outfit the space they were spending the majority of their time in — and they were doing so online.
Wayfair, catering to both these needs, was uniquely positioned to benefit from the new demands of consumers. And it did.
In 2020, the home goods retailer's revenue shot up some 55% to $14.1 billion, while its net income reached nearly $185 million — its first profitable year since going public in 2014 — from a loss of $984.6 million in 2019.
But it seems demand in the category is starting to slow.
According to a recent report from Earnest Research, category growth in Q2 2020 was 50%. But in the most recent quarter, the firm reported growth slowed to 33%.
And while e-commerce took off during the pandemic, consumers appear to be reverting to pre-pandemic channels. Before the pandemic, 80% of home purchases occurred in stores, according to Earnest Research. During the pandemic's height in the second quarter last year, online sales grew 136% over 2019, representing just under 25% of share. But in the most recent quarter, online growth slowed to 73%, representing 22% of share.
But "even if online growth supercharges again, the majority of Home sales remain in traditional brick-and-mortar, highlighting the sector's reliance on consumer foot traffic," per the report.
And with vaccines now widely available, some employees have returned to offices and urban living, lessening the need to invest as much into the home.
Still, Wayfair CEO Niraj Shah noted that this quarter's revenues were "well above pre-pandemic run-rates," representing a 64.6% increase from 2019.
"While the current macro environment is dynamic, the home remains a high priority for our customers and longer term tailwinds to online category growth are firmly in place," Shah said in a statement. "Even as we navigate any near-term volatility, we remain most focused on the long-term and further reinforcing Wayfair's position as the category leader for home with both customers and suppliers alike."