BOSTON — After a brief period of profitability during the pandemic, Wayfair has once again turned negative numbers.
CEO Neeraj Shah told investors during an earnings call this morning that his immediate goal for the next quarter is to break even first and then return to profitability.
“We are continuing the work we started last quarter to control the controllables and guide Wayfair in this environment around three key principles: increasing cost efficiency, stabilizing the essentials, and earning customer and supplier loyalty every day. We are all focused on taking the necessary steps to get there,” Shah said. to EBITDA-adjusted profitability and cash flow neutrality in a short time.”
The company reported total net revenue for the third quarter of $2.8 billion, down 9% from the third quarter of 2021. The net loss for the quarter was $283 million compared to a loss of $78 million in the third quarter of 2021.
The company reported gross profit of $824 million, or 29% of total revenue, for the quarter ended September 30th.
Wayfair stock is trading up more than 5% this morning but is down more than 85% from where it was a year ago.
Third quarter diluted loss per share was $2.66 compared to a loss of 0.75 cents in the third quarter of 2021.
The company said the number of active customers in its direct retail business reached 22.6 million at the end of the third quarter, which was down 22.5% from a year earlier. Repeat customers placed 6.8 million orders in the third quarter of 2022, down 19% from last year.
Shah added that Wayfair has a direct view of over half a billion dollars in savings and plans to achieve that goal in 2023.
“However, we are not stopping there and have identified meaningful additional efficiency opportunities, which we are also working on as we speak,” Shah said. “Our implementation of these initiatives is deliberate and deliberate to ensure that we make progress toward profitability goals without compromising the long-term growth potential ahead of us.”
On the earnings call with investors, Shah said the target remains the same in the most recent quarter, and returned to break-even quickly in 2023 before targeting profitability at the mid-single-digit margin level.
“The average order value will drop some in the near term, but we can’t say by how much,” Shah said on the call. “Inflation is getting worse, so we’re pricing items closer to their future cost to move them faster. Customers will see relief in the form of the reflection of those costs coming down. But even though the average order value is going down, the conversion rate is going up and that offsets how it plays out as well.”
The new CFO, Kate Gulliver, said the company is placing great emphasis on achieving operational cost savings.
“Now is the time to re-engage best practices. Together, we have created annual cost savings of $500 million. 60% of these savings are from reducing people and 40% from operational savings.”
Wayfair cut 5% of its global workforce, or 870 people, in August. On the investor call, both Shah and Gulliver said they will provide information about additional cost-saving measures being taken at the next quarterly call in February 2023.