Wayfair Defies Furniture Slump With Revenue Growth and Earnings Beat

Wayfair stock has been on a tear over the past year. (Gabby Jones/Bloomberg)

Key Points

• Wayfair’s third-quarter revenue was $3.1 billion, exceeding Street projections of $3 billion.
• Adjusted earnings reached 70 cents per share, surpassing analyst estimates of 44 cents per share, with an adjusted Ebitda margin of 6.7%.
• The company’s stock has gained 95% since January, with repeat customers accounting for approximately 80% of total orders.

Wayfair’s third quarter continued to defy the broader slowdown in the furniture industry, with revenue growing 8.1% from a year ago, boosting the stock double-digits Tuesday morning.

The furniture retailer’s sales for the quarter ending in September was $3.1 billion, slightly better than the Street’s projections for $3 billion, according to FactSet. Orders delivered to customers rose 5.4% from the year-ago quarter, with repeat customers placing about 80% of total orders.

Adjusted earnings of 70 cents a share topped analysts’ estimates for 44 cents a share. The company’s adjusted Ebitda margin—or earnings before interest, taxes, depreciation, and amortization—of 6.7% was its highest in history outside of the pandemic period, said CEO Niraj Shah. Lower marketing expenses helped boost margins.

The adjusted numbers exclude one-time charges tied to Wayfair’s restructuring efforts, equity-based compensation, and a $99 million loss from Wayfair’s decision to repurchase some of its outstanding debt at a figure above face value. Factoring those in, Wayfair posted an unadjusted loss of 76 cents a share, wider than the loss of 23 cents a share analysts were forecasting.

The company expects fourth-quarter net revenue to be up in the mid-single digits year over year.

Wayfair stock was up 18% to $102.18 in early morning trading Tuesday.

Wayfair stock has been on a tear over the past year, gaining 95% since January, partially driven by investors’ hopes that lower interest rates will reignite demand for furniture, which has been weak in the post-pandemic era. Sales at furniture and home-furnishings stores fell 2% year over year in 2024, following a 3.5% decline in 2023, according to data from the Census Bureau.

Wayfair’s revenue growth despite the category’s broader sluggishness suggests the company is gaining market share, analysts say. Kate Gulliver, Wayfair’s chief financial officer, notes initiatives such as the company’s loyalty program, new brick-and-mortar stores, and a verification system that highlights the marketplaces’ top products have helped drive that growth.

“All of that rests on a foundation of our core recipe— very competitive pricing, in-stocks and good availability, and very fast ship speeds,” Gulliver said on a call with Barron’s.

Pricing is also an advantage for Wayfair, given the company offers a variety of items across different price ranges. The average order value was $317 in the third quarter, Wayfair said. So far, the company has seen “limited” impacts of price increases, Gulliver said, even though the industry is contending with the threat of new tariffs.

A 25% tariff on certain imported upholstered wood products went into effect in mid-October, and President Donald Trump has threatened to impose further substantial tariffs on any country that doesn’t make furniture in the U.S.

Wayfair doesn’t import most of its products; vendors do, and they are paying the tariff. Gulliver said vendors that didn’t produce domestically were looking for ways to offset the levies, including taking advantage of lower ocean freight rates.

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