Wayfair Is Falling By The Wayside As Profits Plunge
Wayfair's earnings are wavering as both its customer retention and share prices drop to new lows.
One of Ikea’s biggest competitors, Wayfair, has been a staple in providing eloquent and cost-efficient furniture to people worldwide. But unfortunately for the company, its popularity won’t save its dwindling profits. After a tumultuous fiscal quarter, Wayfair has reported surprisingly low sales for the furniture enterprise.
Shares for Wayfair decreased by a whopping 20% this Thursday morning. The online furniture store saw home furnishing purchases go down tremendously, which has affected its stock market value. Many analysts expected the company to have a share drop, but no one expected the reduction would be this devastating. Wayfair also reported that customer engagement had decreased by 23.4% since 2021. This figure could indicate that more people are visiting brick-and-mortar stores for their home decor instead of online retailers.
On top of these abysmal announcements, Wayfair’s CFO has stated that he will retire next year. Michael Fleisher has been the CFO since 2004 and plans to transition his position to the current chief people officer Kate Gulliver. Gulliver will take over the CFO position this November, while Fleisher will remain the CFO until he transitions out of the company in January 2023.
Despite the downfalls, Niraj Shah, a co-founder of Wayfair and the current CEO, has high hopes for the company. Consumer health is still “relatively strong,” Shah said, indicating that there’s still a loyal customer base at Wayfair. While this may be true, the company now has to contend with in-store purchasing of bed frames and couches that have rebounded tremendously since quarantine has ended.
Alongside Wayfair competing with brick-and-mortar stores, the online retailer is also dealing with unyielding supply chain deficiencies. Aggravated customers have lamented about the order delays that have occurred at Wayfair recently, which has also hindered the company’s revenue and customer reliance. Most industries are suffering from supply chain inadequacies motivated by the ongoing pandemic. Still, order interferences have been a crucial part of Wayfair’s turbulence, though executives for the company are still confident in reversing their stock value plummet.
Wayfair is struggling to keep up its standard amount of online shoppers. The number of shoppers has gone down by more than 20% over the past year, dropping to 25.4 million. The average amount of orders decreased from last year as well, going from 1.98 to 1.87. Wayfair has also had complications retaining customers, with far fewer returning customers in 2022 than 2021. Only 8.1 million customers are going back to the site for repeated purchases, a 26% decrease from last year’s total.
Wayfair reported in its last fiscal quarter an enormous loss in revenue. The furniture company lost $319 million, with shares dropping by $3.04 each. Analysts expected the company’s stock share value to decrease by approximately $1.50, but the reduction was much more significant than expected. Overall sales dropped by 14%, which landed Wayfair’s total sales amount to $2.99 billion. The company turned much higher profits the year before, reaching $3.48 billion in its final quarter of 2021. Though Wayfair is still receiving high amounts of online traffic, the retailer still needs to contend with its order inconveniences to stabilize its profit losses.
