Online furniture retailer Wayfair reported third-quarter revenue of $3.1 billion, up 8.1 per cent year on year, as the company benefited from stronger sales nationally.
CEO Niraj Shah said the quarter reflected strong execution and disciplined cost control as the company continued to regain market share.
“We saw orders delivered grow by over 5 per cent year-over-year, including new orders now growing [by the] mid-single digits for two quarters in a row,” Shah said.
US sales rose 8.6 per cent to $2.7 billion, while international sales increased 4.6 per cent to $389 million. Gross profit totalled $934 million, representing 30 per cent of total revenue.
Excluding the impact of its exit from the German market, overall revenue grew 9 per cent.
“Substantial profitability flow-through is powered by a strong contribution margin and fixed cost discipline as our business has returned to growth,” added Shah.
The company narrowed its net loss to $99 million. At the same time, adjusted EBITDA (earnings before interest, taxes, depreciation, and appreciation) rose to $208 million, marking a 70 per cent year-on-year increase and a 6.7 per cent margin.
However, Neil Saunders, MD at GlobalData, described the quarter as a “mixed one,” noting that while the top-line growth was positive, the company’s profit position remains fragile.
“The sales spurt helped drive up group revenue by 8.1 per cent, but this comes off the back of a poor performance last year when sales shrank by 2 per cent,” he explains.
“That inevitably flatters the growth somewhat, although the uplift is still enough to make up for the lost ground.”
Saunders also cautioned that the recent improvement in furniture spending may be temporary, driven partly by consumers bringing forward purchases to avoid potential tariff-related price hikes.
“While we applaud Wayfair’s attempts to take costs out of the business, there’s a big difference between merely reducing losses and producing sustained profit,” he said.
He added that rising costs, competitive pressure, and a debt load of about $2.7 billion could constrain Wayfair’s path forward.
“The best Wayfair can hope for in the medium term is stability and to keep nudging things in the right direction,” Saunders concluded.
“But over the long term, the solution may lie in corporate dealmaking rather than day-to-day retail trading.”
