Wayfair has now reverted to negative numbers following a brief period of profitability during the pandemic.
CEO Niraj Shah informed investors during an earnings call this morning that the company’s immediate goal for the upcoming quarter is to first break even and then return to profitability.
“We’re continuing the work we started last quarter to control the controllables and positioning Wayfair in this environment around three key principles: promoting cost efficiency, nailing the fundamentals, and gaining daily customer and supplier loyalty. We are all focused on taking the steps needed to reach adjusted EBITDA profitability and cash flow neutrality in short order,” said Shah.
A 9% decrease from the third quarter of 2021, Wayfair reported third quarter total net revenue of $2.8 billion. As opposed to a loss of $78 million in the third quarter of 2021, the net loss for the quarter was $283 million.
For the three months that ended on September 30, the company reported gross profit of $824 million, or 29% of total revenue.
Although Wayfair stock is trading more than 5% higher this morning, it has decreased by more than 85% since last year.
In comparison to a loss of 75 cents in the third quarter of 2021, the diluted loss per share for the third quarter was $2.66.
According to the business, there were 22.6 million active customers in its direct retail business at the end of the third quarter, a decrease of 22.5% from the same period last year. 6.8 million orders from returning customers were placed in the third quarter of 2022, which is a 19% decrease from the prior year.
Shah continued by saying that Wayfair has direct visibility to savings of more than $500 million and intends to meet this goal in 2023.
“However, we are not stopping there and have identified meaningful incremental efficiency opportunities, which we are also actioning as we speak,” Shah said. “To ensure that we advance toward our profitability targets without jeopardizing the long-term growth potential in front of us, we execute against these initiatives with care and intention.”
The objective, according to Shah, is to quickly return to break even in 2023 before aiming for profitability with a mid-single digit margin level. This was stated during the earnings call with investors.
“Average order value will drop some in the near term, but we can’t tell by how much,” The caller heard Shah say. “We are pricing items closer to their future cost in order to move them through the system more quickly because inflation is getting worse. Customers will experience relief as a result of the decline in these costs. Although the average order value declines, the conversion rate increases, which also offsets the effects.”
The company, according to Kate Gulliver, the new CFO, is heavily focused on achieving operational cost savings.
“Resuming best practices now is the right move. We have implemented collectively a $500 million annualized cost savings. 60% of this savings is from people reduction and 40% from operational savings.”
870 employees, or 5% of Wayfair’s global workforce, were let go in August. Both Shah and Gulliver stated during the investor call that they would discuss additional cost-cutting initiatives on the following quarterly call in February 2023.
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Source: https://www.furnituretoday.com/financial-results/as-wayfair-faces-big-losses-company-sets-goal-to-break-even/
