Shares of Wayfair Fall on Back of Mixed Q3 Earnings

Home furniture marketplace Wayfair posted a mixed Q3 2021 earnings report on Thursday, beating consensus analyst estimates on adjusted earnings per share while missing on revenue.

The e-commerce firm reported revenue of $3.1 billion, down 18.7% year-over-year from Q3 2020's $3.8 billion. The company also lost $718.5 million quarter-over-quarter, the second quarter in a row in which revenue has declined.

Wayfair's W stock price was down about seven basis points in the morning following Thursday's announcement.

In the U.S., revenue fell by about $680 million, to $2.6 billion. Third-quarter net income was $70.6 million, or 75 cents per diluted share, versus $161.2 million, or $1.67 per diluted share, a year ago.

On the bright side, adjusted earnings per share was 14 cents, beating the analyst consensus of 1 cent. Non-GAAP-adjusted earnings before interest, taxes, depreciation, and amortization was $101.1 million.

"As various geographies reopened post-pandemic, consumers naturally shifted some spend towards travel and entertainment and from eCommerce towards brick and mortar. Demand and interest in the home remain resilient, but it will take a few more quarters for our growth — and e-commerce growth in general — to get back to normal," said Niraj Shah, CEO, co-founder and co-chairman of Wayfair. "Our long-term vision is in sharp focus coming out of the pandemic period. The initiatives required to realize it are in flight, even as we work through near-term macro challenges like supply chain congestion and related inflation."

Wayfair also lost customers in Q3, dropping from 31.1 million active users in Q2 2021 to 29.2 million as of Sept. 31, although it was still an increase of 1.5% year-over-year. Net revenue per active customer in the past 12 months, though, rose from $461 in Q2 2021 to $484 in Q3. Orders per customer were down slightly at 1.92 in Q3 2021 compared to 1.94 in Q3 2020.

Repeat customers placed 8.4 million orders for the quarter, a notable decline of 25.8% year-over-year. Wayfair delivered 11 million orders in Q3, a 30.1% decrease year-over-year, but those orders were more valuable, averaging $283 versus $243 in Q2 2020.

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Slightly fewer orders were placed via mobile devices, with customers placing 57.7% of total orders in the quarter on a mobile device, compared to 60% in Q3 2020.

Wayfair's net revenue for the first nine months of 2021 totaled around $10.47 billion.

"We are, as ever, focused on the long-term, balancing strong growth and profitability over years not quarters, and solidifying our position as the definitive destination for the home," said Shah.

On the company's earnings conference call, Shah hinted at a larger physical presence for Wayfair. He said the company's experimentation with physical retail will trial several forms of Wayfair's brands to determine which will lend themselves to a "new kind of omnichannel shopping experience that blurs the lines between the online and offline."

The company's aim is to capture shoppers who are increasingly returning to brick-and-mortar locations, which likely put a damper on its e-commerce-centric business model. Wayfair has also contended with inventory shortages and product delays due to supply chain disruptions, so much so that it began selling products that are still in transit.

But despite the headwinds, Shah remains optimistic: "To be clear, there is no panacea solution for the supply chain challenges," he said. "It will take some time for the world economy to work through, but we're staying flexible and doing all we can."

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