Wayfair posted second-quarter gains as its strategy gained momentum and recent initiatives, including the launch of physical stores, began to show results.
A Zacks Investment Research analyst consensus estimate called for earnings per adjusted diluted share of 36 cents and revenues of $3.14 billion.
Net revenue was $3.27 billion versus $3.12 billion in the year-prior quarter, with net revenue recorded in the United States of $2.87 billion versus $2.73 billion. Operating income was $17 million versus an operating loss of $35 million in the year-earlier period.
Early this year, Wayfair announced that it would be exiting its business in Germany.
In a conference call, Niraj Shah, Wayfair CEO, co-founder and co-chairman, said the company’s inventory light model gives it flexibility to deal with tariffs via its network of more than 20,000 suppliers worldwide who are working to remain competitive within the platform. So, Shah said, Wayfair customers didn’t see much of a change in the second quarter.
“When we look at the actual items the customers are viewing and purchasing today, prices have remained relatively consistent with the first quarter,” he said.
Among the company’s operational developments, Perigold, its upscale operation focused on luxury and interior designers’ customers, continued to outperform. Wayfair Professional posted double-digit growth. And Wayfair Verified, the company’s focused curation initiative introduced late last year, has been received positively by consumers. Wayfair Rewards, the paid loyalty program the company rolled out last holiday season, has been advancing, Shay said, with member growth exceeding the company’s expectations.
He said brick-and-mortar operations, which the company continues to plan, added to Wayfair’s recent momentum. In Wilmette, IL, where the first Wayfair banner brick-and-mortar store rolled out in May of 2024, the store saw strong results during the company’s Wayday and Memorial Day promotions. It has also generated a halo effect through the Chicago market, including across product segments in which Wayfair is not as well recognized.
So in the Chicago market, Shah said, Wayfair has enjoyed an “over a 50% increase in lower ticket frequency purchases like kitchen accessories and a more than 35% increase in higher-consideration home improvement like bathroom renovation items and kitchen cabinets.”
In addition, the company has launched Multichannel, an expansion of what had been a limited program across the business, one that now allows vendors in its Castlegate logistics operation to fulfill orders outside the Wayfair system.
Wayfair maintained that its third quarter outlook is for revenue growth in the mid to low single digits, and it reiterated gross margin guidance for the low end of a 30% to 31% range.
“The second quarter was a resounding success, defined by accelerating sales and share gain, in tandem with expanding profitability. As we have discussed over the last few years, we can and will grow profitably, while taking a significant share in the market. Year-over-year revenue growth of 6%, excluding the impact of Germany, marks the highest growth rate we have seen since early 2021. Our over 6% adjusted EBITDA margin demonstrates the significant leverage in our model, and as previewed in our investor day two years ago, is just the beginning of what we believe we can achieve over time. Every dollar we spend solves for the best outcome across our customers, suppliers and Wayfair. Two decades of this approach have taught us that building great things takes time, but when done with thought, care and prudence, can have a payoff well worth the wait. You’re seeing some of that this quarter, with years of work we’ve done leading to some of the best growth and profitability flow through our business has seen since the pandemic.”
