Wayfair shares surge 17% after furniture retailer cuts losses by more than $100 million

Wayfair’s sales slid during its first quarter, but the online furniture retailer reduced its losses after cutting 13% of its workforce at the start of the year, the company announced Thursday. 

Wayfair beat Wall Street’s expectations on the top and bottom lines and saw active customers grow nearly 3% compared with the year-ago period. 

Here’s how Wayfair did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

  • Loss per share: 32 cents adjusted vs. a loss of 44 cents expected
  • Revenue: $2.73 billion vs. $2.64 billion expected

Wayfair shares surged more than 17% in premarket trading Thursday.

The company’s reported net loss for the three-month period that ended March 31 was $248 million, or $2.06 per share, compared with a loss of $355 million, or $3.22 per share, a year earlier. Excluding one-time items, the company lost 32 cents per share.  

Sales fell to $2.73 billion, down more than 1% from $2.77 billion a year earlier. The steepest drop-off came from Wayfair’s international segment, where sales declined nearly 6% to $338 million compared with the year-ago period.

Despite the sales drop, co-founder and CEO Niraj Shah struck a positive note in a news release, saying the quarter “ended on an upswing.” 

“Shoppers are increasingly choosing Wayfair, with year-over-year active customer growth once again positive and accelerating compared to last quarter,” Shah said. 

“For the first time since pre-pandemic, we’re seeing suppliers introducing large groups of new products into their catalogs as they look to build momentum for the next stage of growth,” he added.

Like some of its other digitally native peers, Wayfair implemented a series of layoffs after it saw sales boom during the pandemic and then shrink when consumers started trading new couches and shelves for dinners out and travel after the Covid-19 pandemic ended. 

In January, it announced plans to cut 13% of its global workforce, or around 1,650 employees, so it could trim its structure and reduce costs after it went “overboard” with corporate hiring during the pandemic, the company said previously. The restructuring – the third Wayfair implemented since summer 2022 – was expected to save the company about $280 million, it said previously. 

Wayfair is still charting its path to profitability, but it reduced its losses by $107 million during the first quarter after implementing the latest round of job cuts. It also grew its active customer count at a time when the home goods sector faces pressure as high interest rates and a sluggish housing market weigh on sales. 

During the quarter, Wayfair’s active customers grew 2.8% to 22.3 million, slightly ahead of the 22.1 million that analysts had expected, according to StreetAccount.

On average, orders were valued at $285 during the quarter, compared with the $275.07 that analysts had expected, according to StreetAccount. While average orders were higher than Wall Street’s expectations, they fell slightly from the year-ago period, when the average order value was $287. That’s because of changes in Wayfair’s unit prices, which were inflated in 2021 and 2022 and started to come down last year, the company said.

Read the full earnings release here.

Source: https://www.cnbc.com/2024/05/02/wayfair-w-earnings-q1-2024.html

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