Wayfair on Tuesday reported first quarter direct retail net revenue, which includes sales from the company's sites, grew nearly 20.3% year over year to $2.3 billion.
However, the online retailer’s net loss continued to grow, some 43% from the year-ago period, to $286 million, according to a company press release. Wayfair reported negative adjusted EBITDA of $127 million or 5.5% of total net revenue.
The retailer’s active customer base grew 28.6% from last year to 21.1 million during the quarter ended March 31.
With home furnishings and office sales up as more people work from home, Wayfair may be reaping the benefits, at least from a revenue standpoint.
"Millions of new shoppers have discovered Wayfair while they shelter in place at home, and we are seeing strong acceleration in new and repeat customer orders across almost all classes of goods and across all regions," CEO Niraj Shah said in a statement.
Many retailers across the industry temporarily shut their doors because of the coronavirus. Wayfair, though, "has most likely been a beneficiary in terms of customer numbers and spend," Neil Saunders, managing director of GlobalData Retail, said in emailed comments. "From our own data we know that many consumers have turned to online for furniture and furnishings, many of them for the first time."
But sales don’t necessarily equal profit, something Wayfair has long struggled with. Since going public in 2014, the company has yet to make money.
"Kicking off the year over a quarter of a billion dollars in the red is far from auspicious," Saunders said. The company, which owns Wayfair, Joss & Main, AllModern, Birch Lane and Perigold, operates primarily online. But being an online pure player comes at a cost, namely through customer acquisition.
Wayfair in the first quarter spent $276 million on advertising, up 13% from a year ago. It’s something that has plagued other online players, like mattress brand Casper and pet retailer Chewy, who also haven’t achieved profitability yet.
And while advertising is essential for retailers that operate relatively few stores compared to their competitors, Saunders said even without the advertising costs, Wayfair’s model doesn’t suggest profitability any time soon.
"At operating level, minus marketing cost, the company would have made a $13.7 million profit this quarter — a very meager return and not nearly enough to cover its $22.2 million of debt interest for the period," Saunders said.
Earlier this year, Wayfair laid off 550 employees, impacting around 3% of its global workforce. And last month the company announced the postponement of its annual sales event, Way Day.