Wayfair focuses on its efforts after a significant loss in the second quarter

BOSTON — Wayfair reported total net revenue of $3.3 billion in the second quarter, down 14.9% from the second quarter of 2021.

The company posted gross profit of $896 million, or 27.3% of total revenue for the quarter ending June 30. Net loss for the quarter was $378 million, compared to a gain of $131 million in the second quarter of 2021.

The news sent Wayfair shares tumbling 8.8% during pre-market stock market action today.

“In a challenging macro environment, we remain steadfastly focused on our customers and suppliers and ensuring Wayfair is their preferred platform for the home,” said Niraj Shah, CEO, Co-Founder and Co-Chairman. “We are tightly controlling our many levers and leading Wayfair in a fiscally responsible manner throughout this period.”

Diluted loss per share for the second quarter was $3.59, compared to a gain of $1.14 in the second quarter of 2021. The company said the number of active customers in its direct retail business reached 23 .6 million at the end of the second quarter, which is a decrease of 24.1% compared to the previous year. Regular customers placed 7.8 million orders in the second quarter of 2022, down 25.7% from last year.

“Consumers remain engaged and responsive to the right combination of wide selection, great deals and satisfying service, while suppliers lean into Wayfair, giving us more products and better wholesale costs, while further utilizing our service offerings,” Shah added.

“At the same time, we are actively maneuvering Wayfair to generate cash consistently and control our own destiny. This plan is based on an extensive prioritization exercise designed to balance continued investment in long-term growth while ensuring disciplined day-to-day execution in a range of macro scenarios.

On the quarterly earnings call with investors, outgoing CFO Michael Fleisher said, “We now have the opportunity to re-examine everything in our cost structure and become more efficient. We understand our priorities and plan to get people to the right place. Some of our planned initiatives will be pushed to the future or removed altogether, and we plan to do so in a thoughtful way.

Shah added that over the past few weeks, Wayfair has defined a clear set of goals for the entire organization, which include three key principles: one, improve profitability; second, deliver top-notch execution by mastering the basics; third, to retain customers and suppliers every day. Through this lens, Shah said Wayfair makes quick decisions by clearly prioritizing and looking to cut costs from every pocket of the business.

The company’s inventory-light model allows it to be more agile according to Shah: “We have a platform model unlike a retailer who buys goods. They have to choose between reducing the product or removing it from their margins when we don’t have that problem,” he said on the earnings call.

“We don’t look at total availability; we are looking at a class of goods,” he added. “The way our prices are set is that suppliers decide wholesale prices and reduce prices because they have too much inventory, and we are able to pass those savings on to our consumers. Companies that participate in our CastleGate delivery system also manifest themselves in lower cost to the end customer. This means customers get better value and our gross margin increases. »

So far in the third quarter, Wayfair’s gross revenue is down about 10% year-over-year. “This would indicate a break from the typical seasonal pattern, where Q2 and Q3 are generally similar in size,” Fleisher said on the call. “Based on the current trend, we expect Q3 net revenue to be below Q2 levels. Not surprisingly, we see this weakness being driven by the impact of macroeconomic forces on consumers and reflected in the growth of our category as a whole.

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