Wayfair Inc. reported $1.692 billion in sales generated through its e-commerce sites during the third quarter ended Sept. 30. That is up 43.3% over the same period last year, when the furniture retailer produced $1.181 billion in product sales.
However, net losses nearly doubled at Wayfair, No. 13 in the Internet Retailer 2018 Top 500, with $151.7 million in losses this quarter versus $76.4 million during the same period last year. A growing headcount to support its design services and international sales teams led to the larger loss.
“We exceeded even our expected level of hiring,” said co-founder Steven Conine on an earnings call transcribed by Seeking Alpha. Wayfair added 1,200 last quarter, 50% more than it hired in the entire first half of the year, and now employs 11,000 people.
Ad spending to acquire new customers also ate into profits, according to chief financial officer Michael Fleisher. He said on the call that it takes about a year for its customer acquisition cost to pay off for the retailer.
Another big expense to Wayfair’s bottom line in recent quarters has been launching its last-mile delivery facilities, which CEO Niraj Shah said should pay off in the coming quarters. “We’re now operating 27 of our own last mile delivery facilities in North America, giving us coverage of 66% of our U.S. large parcel home deliveries,” Shah said on the call. Its 900,000-square-foot fulfillment center in Dallas also opened during the quarter, and in total, Wayfair now owns about 11 million square feet of logistics space.
A growing percent of orders are coming from returning customers—66.3% during the third quarter compared with 61.0% during the same quarter last year—which the retailer attributes in part to its growing loyalty programs. More than 1 million consumers have Wayfair’s private-label credit card, and those cardholders spend three times as much as non-cardholders in their first two years of owning it, Shah said. Wayfair also recently launched MyWay, a $29.99 yearly membership that offers special deals, discounts on assembly services and free shipping on all orders, not just those over $49.
In other earnings news:
- Under Armour Inc. (No. 33) reported “flat” direct-to-consumer revenue, according to a release from the company. Those sales, which include revenue from company-owned stores and online sales, made up 32% of total revenue, or $465 million during the third quarter ended Sept. 30. The sports apparel retailer and manufacturer didn’t break out e-commerce figures.
- Chinese e-commerce conglomerate Alibaba Group Holdings Ltd. reported online retail revenue growth of 56% year over year for the second quarter ending Sept. 30, to 72.48 billion yuan ($10.55 billion) from 46.46 billion yuan ($6.75 billion). Alibaba owns and operates Chinese marketplaces Taobao and Tmall, which hold the No. 1 and No. 2 spots on the Internet Retailer 2018 Online Marketplaces.
- Flower and gift retailer 1-800-Flowers.com Inc. (No. 66) reported that it grew e-commerce sales—which include both online and telephone revenue—8.2% to $117.7 million from $108.8 million during its fiscal 2019 first quarter ending Sept. 30. The retailer’s Harry & David’s brand had a 10% increase in e-commerce revenue year over year for the quarter, but it didn’t break out exact numbers.
- Cosmetics manufacturer The Estee Lauder Cos. Inc. (No. 70) reported that online sales grew by a double-digit percentage year over year during its fiscal 2019 first quarter ending Sept. 30, but didn’t break out exact numbers.