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Wayfair IPO on the floor of the New York Stock Exchange.

Lucas Jackson | Reuters

Wayfair is inching closer to profitability, but its third-quarter results still fell short of revenue expectations as the home market continues to be under pressure. 

Here’s how the online furniture retailer did during the period compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Loss per share: 13 cents, adjusted, vs. 48 cents expected
  • Revenue: $2.94 billion vs. $2.98 billion expected

The company’s reported net loss for the three-month period that ended September 30 was $163 million, or $1.40 per share, compared with a loss of $283 million, or $2.66 per share, a year earlier. Excluding one-time items, Wayfair reported an adjusted loss of 13 cents per share. 

Sales rose to $2.94 billion, up about 3.7% from $2.84 billion a year earlier. 

Shares of Wayfair were down about 7% in premarket trading following the report.

Wayfair has been focusing on cost discipline to drive profitability and protect its margins as demand remains tepid across the home goods sector and other consumer discretionary categories. That discipline led Wayfair to see adjusted earnings before interest, tax, depreciation and amortization of $100 million, compared to the $55 million analysts had expected, according to StreetAccount. 

Average order values are coming down, but it’s not necessarily because shoppers are buying less, the company said. Over the last year, freight and raw material costs have come down significantly so wholesalers are charging less for Wayfair’s furniture and home goods. Instead of keeping prices elevated, the company has passed those savings down to customers, it said. 

Over the last 12 months, net revenue per active customer declined 1.6% to $538, and during the quarter, average order value dropped to $297 compared to $325 in the year ago period. 

Revenue in the U.S. was up 5.4% year over year to $2.6 billion, while sales internationally fell 7% to $372 million. 

As of Sept. 30, Wayfair’s active customer count dropped 1.3% year over year to 22.3 million but has increased on a quarter over quarter basis, the company said, adding its repeat customers are ordering more. Customers who’ve shopped at Wayfair previously placed 7.9 million orders during the quarter, an increase of 16.2% compared to the year ago period and accounting for about 80% of Wayfair’s total orders. 

“We executed further in the third quarter to produce consistent profitability – with Adjusted EBITDA now positive on a trailing 12 month basis – while also driving demonstrable market share growth, as evidenced by our gains on customers and orders,” Wayfair’s CEO and co-founder Niraj Shah said in a news release. “Even with a turbulent macro, we remain committed to our profitability goals in good times and bad.”

The digitally native retailer, which doesn’t make furniture but instead relies on a network of suppliers to fulfill orders, was a big winner during the pandemic but has struggled over the last year to revive demand amid high interest rates and a sluggish housing market. 

Last May, it instituted a hiring freeze and in January, it cut about 10% of its workforce, or about 1,750 employees. 

Since then, Wayfair’s losses have narrowed and its margins have improved as it worked to reduce selling, general and administrative expenses. During the quarter, those costs came down to $596 million, compared to $656 million in the year ago period.

Its gross margin rose to 31%, compared to 29% in the year ago period.

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