Wayfair Q3 results show ‘resilience’ to industry challenges

Wayfair continues to pick up market share despite a challenging marketplace, Niraj Shah said during the company's third quarter earnings call.

Wayfair Q3 results show ‘resilience’ to industry challenges

BOSTON — Despite consumer trepidations on spending, Wayfair continues to take market share, said Niraj Shah, CEO, co-founder and co-chairman during the company’s third quarter earnings call.

“Q3 marked another proof point of resilience for Wayfair with further market share capture in the face of sustained challenges in the category,” said Shah in a prepared statement.

Wayfair has consistently gained share every quarter since the end of 2022, he noted, using a combination of price optimization, improved logistics and better storefront experience on its websites and apps to capture and retain customers.

“It’s a large, fragmented market,” Shah said of the home furnishings retail business. And while he acknowledged Wayfair’s success, he told those on the call that at least two other companies—Amazon and HomeGoods—are also doing well. “There’s only a handful of winners and many more on the other side,” said Shah, who cited the recent closing of Conn’s as an example.

For the quarter ended Sept. 30, Wayfair saw total net revenue fall by 2% year-over-year to $2.9 billion and U.S. net revenue decrease by 2.3% vs. the same quarter in 2023.

Orders per customer rose slightly to 1.85 for Q3 2024 vs. 1.83 in the previous year’s quarter. Orders delivered were down 6.1%, while average order value was up 4.4% year-over-year to $310.

Gross profit for the quarter was $873 million, or 30.3% of total net revenue. Net loss was $74 million and non-GAAP adjusted EBITDA was $119 million.

Guidance for the fourth quarter, said Kate Gulliver, chief financial officer and chief administrative officer, has sales flat or down slightly, based on continued weakness in the category and consumer distraction from the election. Gross margin is expected to be in the lower end of the 30% to 31% range.

While acknowledging that consumers have been reluctant to spend on bigger-ticket items, such as furniture, heading into the November election, Shah said Wayfair for the past two years has been driving down costs, setting itself up to be the beneficiary when the category does rebound.

He pointed to the company’s newly launched subscription-based Wayfair Rewards program as another driver for gaining market share. With the average customer shopping twice year on Wayfair, Shah said the initial goal is to bring that number to three times, using the enticement of 5% back on all purchases and free shipping on all orders, and eventually to four times yearly.

When asked about how Wayfair Rewards differs from the company’s previous My Way rewards program, Shah said under the old model “the customer value proposition wasn’t that strong.”

“When someone is loyal, it drives incrementality,” said Gulliver, who added the new program tested successfully and will be good for the customer and the company.

On the topic of potential changes in tariffs and the impact, Steve Conine, co-founder and co-chairman, said having a broad selection of products from a wide range of suppliers provides a buffer of sorts in the event of higher tariffs.

Additionally, said Shah, since previous tariffs were put in place, suppliers have moved some business to Vietnam, Indonesia and Cambodia from China. “The industry is more cognizant of the risks,” he said.

See also:

What's Your Reaction?

like

dislike

love

funny

angry

sad

wow

Tomas Kauer - Moderator https://www.tomaskauer.com/