BOSTON — wayfair Continuing its turnaround efforts, it approached profitability in the third quarter, with total net income increasing by 3.7% compared to the same period last year.
In the quarter ended September 30, net revenue was $2.9 billion, up $104 million year over year, driven by U.S. revenue up 5.4% to $2.6 billion, while international revenue fell 7% to $372 million. Gross profit was $917 million, or 31.1% of total net revenue.
“Wayfair is now in a place where we can invest in growth while increasing profitability,” said Niraj Shah, CEO, co-founder and co-chairman of the online home furnishings retailer.
“Q3 is yet another testament to exactly that,” he added, pointing to the second quarter of $100 million in adjusted EBITDA and $42 million in positive free cash flow. “We have also seen improvement in our active customer metric, which is on track for positive year-over-year growth.”
The retailer had embarked on a cost-cutting journey, cutting more than $1 billion in costs by 2023.
Net loss for the quarter was $163 million, down from $283 million in the previous year’s third quarter. Diluted loss per share was $1.40 compared to $2.66 during the same period in 2022; adjusted diluted loss per share was 13 cents compared to $2.11 in the same quarter in 2022.
Active customers in the quarter were 22.3 million, down slightly from 23 million a year earlier. Average order value was $297 and LTM net revenue per active customer was $538. Order momentum is up 14% in the quarter over 2022, with about 80% of orders coming from repeat shoppers, Shah said.
During the earnings call, Shah pointed out several categories that are doing well for Wayfair that aren’t typically associated with the furniture retailer. One of them is mattresses as well as bedding. He said mattresses are outperforming the category’s overall retail sales performance in the low double-digit range.
He credited Wayfair’s success in this category with its breadth of selection at good-better-best price points, as well as value-added factors like financing, in-home installation, and bedding bundles for customers.
He noted that Wayfair’s pet furniture segment is another segment he mentioned, noting that Wayfair has been successful in running promotions around pet-related holidays.
“We did well overall,” Shah said when asked if larger ticket items were discounted compared to smaller purchases like decor.
Kate Gulliver, Wayfair CFO and CAO, said fourth-quarter guidance shows revenue growth is near flat and gross margin is in the 30% to 31% range. Adjusted EBITDA for Q4 is expected to be in the low single-digit range, she said.
Shah also noted that Wayfair’s second Way Day promotion, which ran on October 25 and 26 and was part of its Q4 business, exceeded its internal forecasts.
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