Wayfair came out just ahead of Wall Street estimates in a second quarter that got a boost from an increase in orders.
Niraj Shah, Wayfair CEO, co-founder and co-chairman, touched on specialty retail brand development in the company’s second-quarter conference call, focusing on the upscale Perigold banner, as well as the growth of its growing lineup of namesake Wayfair superstores.
Net loss was $1 million, or one cent per diluted share, versus net income of $15 million or 11 cents per diluted share, in the year-prior quarter. Adjusted for one-time charges, net income was $139 million, or 95 cents per diluted share, versus $134 million, or 87 cents per diluted share, in the year-earlier period, the company reported.
An analyst consensus estimate from Zacks Investment Research called for earnings per adjusted diluted share of 94 cents and revenues of $3.47 billion.
Net revenues were $3.52 billion versus $3.27 billion in the year-previous quarter, Wayfair indicated. Income from operations was $104 million versus $17 million in the year-before period.
Wayfair reported active customers totaled 21.7 million as of June 30, up 3.3% year over year, while second-quarter orders delivered were 10.6 million, up 6% year over year.
In a conference call, Shah discussed the company’s expansion of its upscale specialty banner Perigold and the benefit it brings the company in terms of engaging affluent customers and growing with little overlap to the core Wayfair business. Because Perigold growth, including in brick-and-mortar stores, can be accomplished based on established Wayfair resources and support, building the operation out doesn’t require as much investment as would a from-scratch business, Shah noted. He added plans call for growing the Perigold assortment beyond categories typical of luxury home furnishings digital platforms, with kitchen cabinets and large appliances among the planned expansions. Launched in 2017, Perigold now generates $400 million in sales profitably and has gained margin while expanding, Shah said.
“We have a clear line of sight to grow Perigold into a multibillion-dollar business in the years ahead,” he said.
Shah also commented on the growth of Wayfair superstores and physical retail.
“We’re very excited about what we’re seeing in stores, and that’s not just revenue growth but also how our profit will be driven over time,” he said. “Also, the impact it can have on customers, on customer profile, customer loyalty, customer behavior, because obviously we have a very strong online presence that lets you achieve a set of things with the massive selection, the fast delivery. Obviously, it’s purely online. If you couple that now with having a store, a customer can go either way for any purchase they want, any experience they want. We’re seeing very nice behaviors from that, too.”
With stores and other initiatives, Shah added: “The high-level point I want to make is that we’re investing in things that we think are going to be very strong for the durable growth of the business, and that’s not just revenue growth, that’s profit growth.”
In announcing the second quarter results, Shah said, “Q2 marked another strong quarter of share capture and top-line momentum, with 7.5% net revenue growth fueled by momentum in orders, which were up by 6% for the period. We saw the best sequential growth we’ve seen in a Q2 since the second quarter of 2020. In fact, revenue growth in the U.S. was the best we’ve seen in the entire post-COVID period, with nearly 9% year-over-year revenue growth, continuing the high single-digit share spread we’ve held since last fall.”
Returning to Perigold and its sister banners AllModern, Josh & Main and Birch Lane, Shah said: “We saw noteworthy outperformance from our specialty retail brands, which grew by nearly 20% in the second quarter, and Perigold, which grew by more than 35%. We are excited to see ramping growth in the Wayfair business and complementing that with outsized growth from our specialty and luxury brands, all building to why we expect to see even further acceleration as our numerous initiatives play out.”
