World · August 6, 2022

Anyone buy more sofas and beds from Wayfair?


New York
CNN business

As the pandemic began, people realized they would be spending a lot more time at home. So they decided to upgrade.

Shoppers scrambled for new sofas, beds and décor, remodeled kitchens and patios, and invested in remote working setup. The demand was so strong that it broke global supply chains and caused long delays for goods.

It all meant 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 retail chains. home. Shares of Wayfair (W) jumped 140% in 2020.

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

Inflation has leveraged low- and middle-income shoppers, who have withdrawn their discretionary purchases to focus on paying for basic necessities like groceries, gas, and rent. Wealthier customers have shifted their spending away from furniture and others. travel goods and services. Mortgage rates are on the rise, reducing the demand for new homes.

‘I don’t want to go bankrupt’: High inflation leaves little room for unexpected costs

This is putting pressure on Wayfair and other chains that saw increased sales at the start of the pandemic.

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

“Customers are more careful where their discretionary dollars are going as gas station and grocery store prices consume a larger share of [their] portfolio, “Wayfair CEO Niraj Shah said on Thursday during a call with analysts.

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

Shah said customers have switched to cheaper options and Wayfair has increased promotions to stimulate demand.

Wayfair’s shares plummeted over 60% this year, while RH’s shares dropped 45% and Bed Bath & Beyond fell 57%. Williams-Sonoma, which also includes West Elm and Pottery Barn, lost 13%.