Wayfair, the online furniture retailer, reported a decrease in sales during its first quarter. However, the company managed to reduce its losses after implementing a workforce reduction of 13% at the beginning of the year. Despite the decline in sales, Wayfair exceeded Wall Street’s expectations both in terms of revenue and loss per share. Active customers also grew by nearly 3% compared to the previous year.
Wayfair reported a net loss of $248 million, or $2.06 per share, for the three-month period ending March 31. This was an improvement from the previous year’s loss of $355 million, or $3.22 per share. Excluding one-time items, the company reported a loss of 32 cents per share. Sales for the quarter totaled $2.73 billion, a slight decrease from the previous year’s $2.77 billion. The largest decline in sales came from Wayfair’s international segment, which saw a 6% decrease in revenue. Despite these results, Wayfair’s shares rose more than 10% in morning trading following the earnings report.
Wayfair’s co-founder and CEO, Niraj Shah, expressed optimism about the company’s performance in a news release, highlighting the positive growth in active customers and supplier engagement. The company had implemented a series of layoffs in January, reducing its global workforce by 13% in an effort to streamline operations and cut costs. This restructuring, the third of its kind since 2022, was expected to save Wayfair approximately $280 million. The company’s path to profitability is still a work in progress, but it managed to reduce its losses by $107 million in the first quarter following the job cuts.
Despite challenges in the home goods sector due to high interest rates and a sluggish housing market, Wayfair saw a 2.8% increase in active customers during the quarter. The average order value was $285, slightly higher than analysts’ expectations of $275.07. However, this was a decrease from the previous year’s average order value of $287. Wayfair attributed this decline to adjustments in its unit prices, which had been inflated in 2021 and 2022 but began to normalize in the current year.
Wayfair’s performance in the first quarter of the year showed a mix of positive and challenging results. While the company managed to reduce its losses and exceed revenue expectations, the decline in sales and changes in order values indicate ongoing adjustments in its business model. The workforce reductions and restructuring efforts are part of Wayfair’s strategy to improve efficiency and cut costs in a changing market environment. As the company continues to navigate these challenges, its ability to sustain customer growth and strengthen its financial position will be key factors to watch in the coming quarters.