- Wayfair on Thursday reported first quarter net revenue fell nearly 14% year over year to $3 billion. In the U.S., revenue fell about 10% from last year to $2.5 billion.
- The home goods retailer posted a $319 million net loss from a profit of $18 million in the year-ago period. Wayfair’s operating loss was $310 million from a profit of $26 million last year. The retailer’s active customer base fell 23.4% year over year to 25.4 million, according to a company press release.
- Wayfair on Thursday also announced the retirement of Michael Fleisher, who was appointed CFO in 2013. Kate Gulliver, who is currently the retailer’s chief people officer, will take over the chief financial officer and chief administrative officer roles in November.
The gains Wayfair experienced at the height of the pandemic — when demand for home goods was high and consumers were shifting spending online to avoid trips to stores — appear to have been temporary.
The retailer, like others selling home goods, benefited during the early days of the pandemic from consumers wanting to invest more in the spaces they were spending the majority of their time in. But as restrictions eased, consumers began shifting spending away from the home to other areas, particularly experiences, causing Wayfair to lose both sales and customers; the retailer lost nearly 2 million customers over the course of Q1 alone.
Wayfair, however, appears to be suffering more than the overall home goods category, according to GlobalData Managing Director Neil Saunders. As the retailer’s first quarter sales in the U.S. fell by 9.9%, the overall U.S. home furnishing and furniture market grew by 5.8% from last year.
“Quite simply, Wayfair is losing market share hand-over-fist,” Saunders said.
More recently, factors like inflation and rising fuel prices are causing many consumers to pull back spending on discretionary purchases.
“Our mass customers in the U.S. and internationally appear, understandably, more focused on where they are spending their next dollar, pound or euro,” Wayfair CEO Niraj Shah said on a call with analysts Thursday. “Consumer spending is still climbing for retail overall. However, even with a relatively healthy individual balance sheet, shoppers are nonetheless diverting a larger share of their wallets to non-discretionary categories, and reprioritizing experiences like travel. Reflecting these trends within our business we're seeing more strength from luxury and professional customers vis-à-vis mass shoppers.”
The impact of consumer spending shifts is felt particularly hard by furniture retailers due to the fact that they sell high-ticket items, according to Saunders. He added that, “it can be especially damaging for online as the channel tends to be more discretionary and reliant on impulse buys than physical retail.”
Wayfair just wrapped up its annual Way Day sales event, which executives said was the company’s “most successful” event ever, reporting that this year’s Way Day represented two of the four largest days in Wayfair’s history.