Dive Brief:
- Wayfair Inc. posted its “strongest quarter of growth in the post-pandemic period,” CEO Niraj Shah said Wednesday.
- The retailer reported third quarter total net revenue grew 9.7% year over year to $3.4 billion and U.S. net revenue grew over 11% to $3 billion.
- Wayfair also swung into the black, posting a net income of $62 million from a loss of $99 million in the year-ago quarter. Operating income also improved, reaching $106 million compared to $38 million last year.
Dive Insight:
Wayfair’s Q3 results beat both analysts’ and the company’s own expectations.
“At the start of this year, we told you we expected to take share in the U.S. at a pace we had not seen in several years. With U.S. revenue growing double digits against a roughly flat category here in Q3, we've done exactly that,” Shah said in a statement Wednesday.
Revenue growth was driven by a 4.7% increase in active customers, reaching 22.2 million, and a 12.2% increase in orders delivered, though average order value decreased slightly in the period.
Notably, Wayfair was able to grow its customer base without significantly increasing its advertising spend, according to GlobalData Managing Director Neil Saunders. Ad spend was up 2.4% year over year. As a percentage of total revenue, ad spend was 9.9% compared to 10.6% last year.
Wayfair’s growing network of stores will continue to help the retailer offset the high costs of acquiring customers online, Saunders noted.
The company itself has previously touted the benefits of its physical stores in acquiring new customers, stating that at its Chicago-area location, over half of shoppers are new to the Wayfair brand.
Wayfair in August announced plans to open its 10th store for that brand, set to open in Altamonte Springs, Florida, in 2028. It will join existing and upcoming locations in areas including Atlanta; Denver; and Columbus, Ohio.
Wayfair also appears to be benefiting from its assortment across multiple home categories. While consumers are delaying or forgoing larger, more expensive remodels, they’re still engaging in smaller projects.
“This is particularly helpful for Wayfair as its very broad offer and authority across many categories suits more fragmented and occasional buying patterns,” Saunders said.
