Wayfair’s sales declined in the first quarter, however, the online furniture retailer managed to decrease its losses after implementing a workforce reduction at the beginning of the year. The company exceeded Wall Street’s expectations in terms of revenue and posted a growth in active customers compared to the previous year.
The company reported a loss of 32 cents per share, adjusted, as opposed to the expected loss of 44 cents per share. Additionally, Wayfair’s revenue reached $2.73 billion, surpassing the expected $2.64 billion. Consequently, Wayfair’s shares surged by over 17% in premarket trading on Thursday.
Financial Performance and Sales Decline
Wayfair disclosed a net loss of $248 million, or $2.06 per share, for the three-month period ending on March 31st. This represented an improvement from the loss of $355 million, or $3.22 per share, experienced in the same period a year ago. Excluding one-time items, the company’s loss was 32 cents per share.
In terms of sales, there was a decrease to $2.73 billion, down over 1% from $2.77 billion in the previous year. The most significant decline was noted in Wayfair’s international segment, where sales dropped by nearly 6% to $338 million compared to the same period from the year before.
Despite the decline in sales, Wayfair’s co-founder and CEO, Niraj Shah, expressed positivity in a news release by mentioning that the quarter concluded on an upward trajectory. Shah highlighted the increase in active customers compared to the previous year and stated that shoppers are increasingly opting for Wayfair.
Moreover, Shah mentioned that suppliers are introducing new products into their catalogs in anticipation of future growth, suggesting a positive outlook for Wayfair going forward.
Similar to other e-commerce companies, Wayfair faced challenges post-pandemic and had to make difficult decisions such as laying off employees to streamline operations and reduce costs. In January, the company announced a reduction of 13% of its global workforce, amounting to around 1,650 employees.
This was the third restructuring initiative by Wayfair since the summer of 2022. The company expected to save approximately $280 million as a result of these measures. Despite the workforce reduction, Wayfair managed to decrease its losses by $107 million in the first quarter.
Wayfair continues to navigate its path to profitability amidst challenges in the home goods sector due to high interest rates and a slow housing market. Nevertheless, the company was able to grow its active customer count by 2.8% to 22.3 million during the quarter, slightly exceeding analysts’ expectations.
The average order value was $285, higher than the anticipated $275.07. However, it was slightly lower than the average order value of $287 during the same period the previous year. Wayfair attributed this change to adjustments in unit prices, which were elevated in 2021 and 2022 but began decreasing last year.
Wayfair’s strategic initiatives, including workforce reductions and a focus on customer growth, have shown positive results despite challenges in the market. With a positive outlook from its CEO and a reduction in losses, Wayfair seems to be on the right track towards long-term sustainability and profitability.