Wayfair swings to loss, misses Street on revenue in tough Q3

Wayfair Inc. lost momentum from the first two quarters of fiscal 2021 as it reported a net loss and failed to meet Wall Street expectations for revenue.

The online home goods and furniture giant reported a net loss of $78.02 million, compared to net income of $173.16 million during the third quarter of fiscal 2020. Total net revenue of $3.1 billion decreased 19% year-over-year from $3.84 billion a year earlier. This total decline included a 21% drop in U.S. net revenue to $2.6 billion. Consensus analyst estimates had pegged Wayfair’s total net revenue at an expected $3.24 billion.

In one bright spot, adjusted earnings per share (EPS) of 14 cents beat analyst projections for a penny per share. Other highlights from the quarter include:

• Active customers reached 29.2 million as of Sep. 30, 2021, an increase of 1.5% year-over-year.
• LTM net revenue per active customer was $484 as of Sep. 30, 2021, an increase of 7.3% year-over-year.
• Orders per customer, measured as LTM orders divided by active customers, was 1.92 for the third quarter of 2021, compared to 1.94 for the third quarter of 2020.
• Repeat customers placed 76.3% of total orders in the third quarter of 2021, compared to 71.9% in the third quarter of 2020.
• Repeat customers placed 8.4 million orders in the third quarter of 2021, a decrease of 25.8% year-over-year.
• Orders delivered in the third quarter of 2021 were 11 million, a decrease of 30.1% year-over-year.
• Average order value was $283 for the third quarter of 2021, compared to $243 for the third quarter of 2020.

In the third quarter of 2021, 57.7% of total orders delivered were placed via a mobile device, compared to 60% in the third quarter of 2020.

In a tweet, Neil Saunders, managing director of GlobalData Retail, cited Wayfair’s swing to a loss as part of the broader consumer recovery from the COVID-19 pandemic.

“Now that demand for home products is easing, Wayfair is back to making huge losses. Nature is healing,” Saunders said in the tweet.

However, Niraj Shah, CEO, co-founder and co-chairman, Wayfair, said demand for home items is still there and struck an optimistic tone for the future.

“Wayfair delivered $3.1 billion in net revenue and over $100 million of adjusted EBITDA in the third quarter,” said Shah. “As various geographies reopened post-pandemic, consumers naturally shifted some spend towards travel and entertainment and from e-commerce towards brick-and-mortar. Demand and interest in the home remains resilient, but it will take a few more quarters for our growth – and e-commerce growth in general – to get back to normal.

“Our long-term vision is in sharp focus coming out of the pandemic period. The initiatives required to realize it are in flight, even as we work through near-term macro challenges like supply chain congestion and related inflation,” said Shah. “We are, as ever, focused on the long-term, balancing strong growth and profitability over years not quarters, and solidifying our position as the definitive destination for the home.”

Recent technology-based moves from Wayfair include renewing its partnership with risk management solutions provider Riskified to focus on fraud detection and introducing Wayfair On Air, which provides users of the Wayfair mobile app with a video-based means of discovering and purchasing products.

Based in Boston, Wayfair offers more than 22 million products worldwide across home furnishings, decor, home improvements, housewares and more. Wayfair’s sites include Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold.