Wayfair Inc. reported earnings results from its fiscal fourth quarter ended Dec. 31. Total net revenue grew by $13 million, or 0.4%, to $3.1 billion.

“Our efforts over 2023 led to large improvements in our core recipe across availability, speed and price competitiveness. These improvements were directly responsible for our robust share expansion throughout the year and for the step-up we saw in customer loyalty, including year-over-year growth in our active customer count by the fourth quarter,” cofounder and CEO Niraj Shah said in a written statement.

Wayfair ranks No. 10 in the Top 1000, Digital Commerce 360’s ranking of the largest online retailers in North America.

Wayfair Q4 and annual revenue

U.S. net revenue grew more quickly than total revenue, increasing 0.9% to $2.7 billion. Meanwhile, international revenue declined 2.7% to $404 million. International revenue declined year over year in each quarter of 2023. Net loss was $174 million for the quarter.

For the full year, total net revenue declined 1.8% to $12.0 billion. U.S. net revenue grew slightly, up 0.2% to $10.5 billion, while international net revenue declined 13.3% to $1.5 billion. Net loss was $738 million.

Wayfair cuts costs

In January, Wayfair cut 1,650 workers. That was 13% of its total workforce and 19% of corporate workers. The layoffs are expected to save about $280 million annually, Wayfair said. So far, the decision is paying off.

“While it is early, it does seem like we are getting more done, and faster, and at a lower cost,” Shah and cofounder Steve Conine wrote in a letter to investors.

Shah told investors that the layoffs were done with an “eye to what we thought a very efficient organizational model would be versus a cost savings target.” The furniture retailer may make “modest” additions to headcount going forward, with a continued focus on efficiency and productivity, he said.

Wayfair addresses competition

Shah said Wayfair does not currently view Shein, Temu and TikTok Shop as meaningful competitors, even as the online retailers and marketplaces expand into more home offerings. 

“What we’ve really seen is where they compete is at the very low end of the market, both low end quality wise and ticket size,” he said. “Some of them are very large advertising spenders and we have not seen them really be a player when we look at the share.”

Temu, which sells bed frames and inflatable couches among other discount goods, recently spent millions on commercials that aired during the Super Bowl.

Shipping and logistics challenges

Wayfair has been impacted by supply chain disruptions in the Red Sea, Shah said, especially for products shipped from Europe through the Suez Canal. Houthi rebels in Yemen have attacked commercial ships in the Red Sea. The Houthis have said they will continue to target Israel-bound ships while the attacks on Gaza are ongoing. Carriers are responding by rerouting shipments, including around the southern tip of Africa.

However, the disruptions are minimal compared to what Wayfair has experienced in recent years, Shah said.

“It’s important to keep in mind the minor scope of supply chain disruption this poses in contrast to the type of disruption we faced back in 2021. These new routes increased shipping time on a much more manageable basis than we faced in 2021, and availability across our catalog has seen no meaningful negative impact,” Shah said.

Container prices have also risen, “but nowhere near the order of magnitude the industry faced a few years ago when rates reached $20,000 per container during the COVID crisis,” he said.

Wayfair results

For the fourth quarter ended Dec. 31, Wayfair reported:

• Total net revenue increased 0.4% to $3.1 billion.
• Net loss was $174 million.
• Active customers declined 1.4% to 22.4 million.

For the year ended Dec. 31, Wayfair reported:

• Total net revenue declined 1.8% to $12.0 billion.
• Net loss was $738 billion.

Percentage changes may not align exactly with dollar figures due to rounding.

Check back for more earnings reports. Here’s last quarter’s Wayfair update.

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