Wayfair reported revenue, active customers, and orders were down for its fiscal first quarter ended March 31, 2023.
Total net revenue decreased for the eighth consecutive quarter. Revenue was down 7.3% year over year to $2.8 billion. The majority of the revenue, $2.4 billion, is from U.S. sales, which were down 5% year over year.
Despite decreasing revenue, CEO and co-founder Niraj Shah called Q1 a “strong quarter” for the online furniture retailer. Wayfair expects to report a profit as soon as Q2.
“We have always known, and now we are clearly demonstrating that the Wayfair model is inherently profitable and that there is considerable opportunity in front of us to rapidly drive further margin expansion,” Shah said.
Wayfair ranks No. 10 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales.
Customer and order growth
Wayfair’s plan to report a profit in Q2 is based on growing customer and order numbers, Shah told investors. The retailer says it has a “dense” promotional calendar for 2023, with sales including its annual Way Days.
In Q1, active customers were down 14.6% year over year to 21.7 million. Wayfair delivered 9.7 million orders in the quarter, down 6.7% over the first quarter of 2022. The average order value stayed consistent at $287.
So far in Q2, which includes April and the beginning of May, orders are up year over year for Wayfair.com, Shah said.
Some experts also predict Wayfair will see a small bump from the downfall of Bed Bath & Beyond.
Reducing shipping costs
Wayfair continued its focus from last quarter on cutting costs, with extra attention on shipping. The retailer classifies all orders as small or large depending on size and weight. Small items are shipped through UPS or FedEx, and larger items go through Wayfair’s delivery network. Many of the most frequently sold items straddle the line at around 150 lbs., Shah said. Wayfair began using more sophisticated analytics to determine which items needed to be shipped in a Wayfair truck with two delivery drivers. Shipping this way is more expensive, but the decreased incidences of damaged products created cost savings, he said.
For the quarter ended March 31, Wayfair reported:
- Total revenue decreased 7.3% year over year to $2.8 billion.
- U.S. net revenue decreased 5% year over year to $2.4 billion.
- Net loss was $355 million, up from a net loss of $319 million in the year-ago period.
- Active customers were down 14.6% to 21.7 million.
- Average order value was unchanged at $287.
Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.
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