E-commerce company reports wider-than-expected Q1 losses

Yahoo Finance Live’s Julie Hyman discusses first quarter earnings for Wayfair.

Video Transcript

JULIE HYMAN: Let’s talk about– we were talking about revenge travel. I guess that the pandemic furniture buying trend, right, was the inverse of that, and Wayfair came out with its numbers. The company having a loss in its first quarter of $1.96, an adjusted EBITDA loss as well. So cash flow negative and on an absolute basis.

Earnings per share, negative. Sales beating estimates by a little bit here.

– And this is just another e-commerce company– another e-commerce tech company and seeing shares down 16% right out of the gate here, are getting no love on the street. EBay, you have Etsy as well, Wayfair getting slammed here.

Two numbers that stood out to me, active customers down 23.4% year over year. Perhaps some COVID fatigue there. And then orders per customer also declined slightly. Do not like to see that for a business like Wayfair.

– Yeah, I mean, serving real plastic on the couch feels here over at Wayfair. Total net revenue, that was down 13.9%, year over year. You saw net revenue of $2.5 billion decreased $279 million down 9% year over year as well– nearly 10% year over year, I should say.

And so for Wayfair, what we have been looking at for years is all of this data that they were able to amass, and then look at strategic markets where they even wanted to go into storefronts. Does this put the entire dampener on that?

Because we know brick and mortar is going to be even tougher for them to continue to maintain, especially if it’s an environment where you’ve got supply chain challenges in furniture, and then you’ve got a waning, perhaps consumer demand to refurnish the house, especially if you’re not spending as much time as you were at the height of the pandemic in there.

JULIE HYMAN: So to bring it back to the Fed here for a second– and I know we’re going to talk about Shopify in a minute, which is also exemplifying what’s going on out there, we talked to Josh Wolf of Lux Capital yesterday, and he posits that the economy is too weak. The Fed waited too long. Now the economy is too weak for the Fed to be continuing to raise rates.

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And here you have a handful of companies now, particularly those that have benefited during the pandemic, that are rolling over in that are seeing weakening demand. So they’re not the entire economy, but it does tell us that there are some weak spots for sure.

– That is an awesome point. And I just mentioned active customers for Wayfair. They were down 23.4%, and that comes as the average order value for Wayfair was $287 in the quarter versus $237. Whether that is– to me, I read that as inflation, and consumers pulled back.

JULIE HYMAN: Well, and it’s what– it’s what Josh talked about as well. It was the pull forward. How many couches can you buy?

– Yeah.

JULIE HYMAN: You don’t need that many couches.

– I have a one bedroom. I only have one.

JULIE HYMAN: You bought your couch during the pandemic. You’re not going to buy another couch now. You’re not even going to buy another light fixture. Whatever it is that you bought from Wayfair, you bought it when you were stuck at home and looking at your house. You’re not buying it again. You pulled it forward. It’s not like a repeat thing.

– There’s never enough lights. Never enough lights. But maybe that’s just more biased because we’re in this business. Never enough lights.

– Looking at stools now. Looking for the ones that fold.