- Wayfair continued to suffer from sales declines in the fourth quarter, reporting net revenue fell 4.6% year over year to $3.1 billion. By region, U.S. revenue declined 1.8% from last year to $2.7 billion, while international revenue fell 19.7% to $415 million.
- The online retailer’s active customer base in the fourth quarter fell 19% year over year to 22.1 million, according to a company press release. Orders per customer fell to 1.81 compared to 1.89 in 2021, but net revenue per active customer increased 10.4% from last year to $553.
- Wayfair moved deeper into the red, with fourth quarter operating loss growing 68% year over year to $330 million and net loss increasing 74% to $351 million. For the full year, the retailer’s net revenue declined 11% to $12.2 billion and its net loss widened by $1.2 billion to reach $1.3 billion.
Wayfair’s fourth quarter results show sales declines are slowing from previous quarters, but its losses are mounting.
The retailer’s net revenue decline of 4.6% in the period is “shallow,” GlobalData Managing Director Neil Saunders said, compared to last year’s Q4 revenue decline of 11.4%. But on a two-year basis, Wayfair’s net revenue fell some 15.5%.
The retailer’s shrinking customer base also comes as Wayfair spends more on its marketing in an attempt to draw in customers. During the fourth quarter, advertising spend increased by 18% to $406 million and represented about 13% of total revenue. For the full year, advertising expenses grew 7% from the prior year to $1.5 billion, or about 12% of total revenue.
At the onset of the pandemic, the retailer was uniquely positioned to benefit by selling both online and in a category that was in high demand.
This helped the online home retailer reach profitability for the first time since going public in 2014. But in the years since, Wayfair has faced falling sales and a declining customer base, and its loss continues to widen.
To help cut costs, the retailer has taken steps, such as enacting layoffs. Wayfair in January announced it would lay off 1,750 workers, mostly corporate employees, representing 10% of its total global workforce. This marked the retailer’s second round of layoffs in less than six months: In August, Wayfair announced it would let go of 870 employees, or about 10% of its corporate staff.
However, these operational changes and goals to reduce advertising expenses won’t “transform the company into a profit-making machine” even if fully realized, according to Saunders. “Wayfair has become addicted to advertising as a way of propping up its top line. In short, we maintain our view that Wayfair has a business model that, on a fundamental level, simply does not work.”