Wayfair Stock Jumps as Earnings Top Expectations. Is the Covid-Era Furniture Boom Back?

Wayfair stock is up 60% this year. (Photo by Jason Mendez/Getty Images for Wayfair)

Wayfair posted its best quarter since the pandemic-era furniture boom, continuing to buck the category’s weak performance.

The online furniture retailer’s second-quarter net revenue rose 5% from a year ago, to $3.3 billion, topping analysts’ expectations for $3.1 billion, according to FactSet. In the U. S.—Wayfair’s largest market—sales rose 5.3% from last year.

Shares jumped 6.5% to $69.51 on Monday morning. Wayfair stock is up 60% this year.

Adjusted earnings of 87 cents a share for the quarter ended in June came in ahead of expectations, too. Analysts had penciled in 33 cents a share. Adjusted earnings before interest, taxes, depreciation, and amortization were $205 million.

This was Wayfair’s highest revenue growth since 2021, as well as its highest adjusted Ebitda since then.

“For years we’ve been talking about how the model is poised for flow through and significant profitability as we start to see topline recovery, and we really saw that manifest this quarter,” said Kate Gulliver, Wayfair’s chief financial officer, on a call with Barron’s.

The adjusted earnings figure doesn’t factor in certain one-time costs, including restructuring charges related to March layoffs and the company’s decision to shut down business in Germany. Factoring those in, earnings were 11 cents a share, also better Wall Street’s projections for a loss of 33 cents a share.

Gulliver expects third-quarter revenue to be higher compared to last year by a low- to mid-single digit percentage, a better outlook than analysts’ current projections for sales to be flat year over year. Gross margins will be on the lower range of a 30% to 31% range.

The decision to close its German business dragged on Wayfair’s active customer count, which dropped 4.5% to 21 million in the June quarter from the year earlier. Annual revenue growth would have been 6% instead of 5% if the company were still operating in Germany. Executives are betting customers across Wayfair’s other geographies—namely, the U. S.—can make up the difference.

Indeed, Wayfair’s average order value ticked up to $328 in the second quarter from $313 in 2024. Gulliver attributes the increase partially to stronger performance among Wayfair’s high-end specialty retail brands and business-to-business segments, which sell items at a higher price point.

Gulliver added that the company’s revenue growth this quarter outperformed the broader home furnishings category, suggesting that Wayfair is gaining market share even as demand for furniture remains soft. Long-term initiatives to improve the customer experience, including quick shipping times, product availability, and competitive pricing, are all helping boost the company’s prevalence in the market.

Wayfair’s marketplace model means that the company itself doesn’t buy or import merchandise—third-party suppliers do. They also set prices. So far, the company has yet to see significant price increases in response to new tariffs, Gulliver said, largely because the company’s marketplace foments a natural competition that helps keep prices competitive for customers. Wayfair’s search algorithm sorts through the marketplace to turn up better-value products for shoppers, often determined by a combination of availability, product quality, speed of delivery, and pricing.

Write to Sabrina Escobar at sabrina.escobar@barrons.com