Wayfair Inc. reported total net revenue declined 3.4% in the second quarter ended June 30, totaling $3.2 billion.
The online furniture retailer reported nearly no change in U.S. revenue year over year, with a decline of just 0.4% to $2.8 billion. That was 15.3% higher than in Q1.
Merchandise costs fell 8.4%, keeping losses to $46 million. That’s well below predictions of $74 million, Reuters reported.
Wayfair shares reasons for optimism
Even with declining revenue, Wayfair says Q2 was a positive sign for the retailer’s future.
“Last year, we laid out a plan to strengthen our business that included a path to sustainable and growing profitability with several key milestones,” CEO and co-founder Niraj Shah said in a written statement. “For the past few quarters, you’ve seen us execute against that plan — to lower our costs, focus on the basics and earn more customer and supplier loyalty. And you’ve seen the tangible impact of this plan as our performance has continued to improve.”
Some metrics did grow in the quarter. Net revenue per active customer in the last 12 months was up 1.5% to $545. Wayfair delivered 10.3 million orders in the quarter, up 3% year over year. And, the majority of these orders (80.1%) were placed by returning customers, amounting to 8.3 million orders.
Margins passed 30% in the quarter, Shah told investors, something the retailer previously only achieved during the height of the pandemic in 2020.
“Unlike three years ago, the improvement in gross margin and its impact on our unit economics is durable,” Shah said.
Wayfair vs. Overstock
Wayfair seemed to fare better than its online furniture rival, Overstock, in Q2. Overstock.com Inc. reported revenue was down to $422 million for the quarter ended June 30, 2023. Like Wayfair, though, losses were less severe than in the previous quarter. Revenue was down 20% year over year, but that’s less of a drop than the 29% decrease in Q1.
Overstock attributed sluggish sales to problems in the home furnishing category overall. The retailer pointed to decreased consumer engagement and the weak housing market, echoing talking points from April. However, Wayfair CEO Shah told investors that “we’re seeing nice demand” when asked about impacts of the housing market.
“Wayfair meaningfully outperformed the competition this spring with net revenue down 3% year-over-year in Q2 compared to a category that continues to be down 10% to 20% for widely tracked estimates in credit card and e-mail receipt data,” Shah said.
For the fiscal second quarter ended June 30, Wayfair reported:
- Total net revenue declined 3.4% to $3.2 billion.
- Net loss was $46 million.
- Active customers declined 7.6% to 21.8 million.
- Net revenue per active customers in the last 12 months grew 1.5% to $545.
For the fiscal first half ended June 30, Wayfair reported:
- Net revenue declined 4.5% to $5.9 billion.
- Net loss was $489 million, down from $682 million in the year-ago period.
- Active customers declined from 24 million to 22 million.
Percentage changes may not align exactly with dollar figures due to rounding.
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