Does anyone still buy sofas and beds from Wayfair?


New York
CNN Business

Early in the pandemic, people realized that they were going to be spending a lot more time at home. So they decided to upgrade.

Shoppers handed out new couches, beds and decor, remodeled their kitchens and backyards, and invested in their remote work setup. Demand was so high that it broke global supply chains and caused long product delays.

It was all boom times for online retailer Wayfair (W) and companies like Williams-Sonoma (WSM), RH (RH), Bed Bath & Beyond (BBBY), Overstock (OSTBP) and other furniture and home goods chains. home. Wayfair (W) shares are up 140% in 2020.

Fast forward two years. The image looks very different now.

Inflation has hit low- and middle-income shoppers, who have withdrawn discretionary purchases to focus on paying for necessities like groceries, gas and rent. Richer customers have shifted their spending from furniture and other goods to travel and services. Mortgage rates have risen, reducing demand for new homes.

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That’s putting pressure on Wayfair and other chains that saw increased sales early in the pandemic.

Wayfair said Thursday that its sales were down 15% during the latest quarter ending June 30 compared to the same period last year; it also lost 24% of its active customers, a sign the company is struggling to retain the shoppers it gained at the start of the pandemic. Wayfair posted a net loss of $378 million for the quarter.

“Customers are being more deliberate about where their discretionary dollars are going, as gas station and grocery store prices eat up a bigger chunk of [their] wallet,” Wayfair CEO Niraj Shah said in a call with analysts on Thursday.

“We’ve also seen a lot of those discretionary dollars being diverted from goods to services, especially travel,” he added.

Shah said customers have been shopping for cheaper options and Wayfair has been ramping up promotions to stimulate demand.

Wayfair shares have plunged more than 60% this year, while HR shares have lost 45% and Bed Bath & Beyond is down 57%. Williams-Sonoma, which also includes West Elm and Pottery Barn, is down 13%.

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