Wayfair shares are plummeting after its CEO said on an earnings conference call that demand for home goods is at “financial crisis” levels.
The struggling online furniture giant reported second-quarter profits on Thursday that missed Wall Street expectations on both the top and bottom lines, sending its shares down more than 11%.
“Our credit card data shows that the category adjustment mirrors the magnitude of the peak-to-trough decline the furniture industry experienced during the great financial crisis,” Wayfair CEO Niraj Shah said in a press release. “Customers remain cautious about spending on their homes.”
The Boston-based retailer has struggled since the end of the pandemic, with problems exacerbated by a slowdown in new home buying due to high interest rates and inflation.
The company cut 870 jobs, or 5% of its workforce, a year ago and cut another 1,650 in January, blaming excess hiring during the pandemic as consumers invested in homes.
“The reality is, I think we over-hired during the good times and strayed from our fundamentals. We’ve come back to those fundamentals to a certain extent, but not far enough,” Shah said in January when the company announced its restructuring plans.
For the quarter ended June 30, Wayfair reported a loss of $42 million, or 34 cents a share, on sales falling 2% to $3.12 billion.
Wayfair is emphasizing discounts to lure customers back.
“We’re seeing a decline similar to what we saw from 2008 to 2010, and I think it speaks to the sector going through a major correction, the kind of correction we’ve only seen in the past during GDP downturns,” Wayfair’s financial chief Kate Gulliver said in an interview with CNBC.
While the industry typically holds “white sales” or deep discounts on such items in January, the company was advertising 60% off bedding and bath linens on Thursday.
