Wayfair books fastest sales growth since the pandemic, beats Q3 forecasts

The quarter in numbers

Wayfair delivered third quarter revenue of $3.42 billion, up 9.7% from a year ago and ahead of the $3.38 billion that analysts polled by LSEG expected. In the U.S., sales climbed 11.4% to roughly $3 billion, while international net revenue declined 2.3% to $380 million.

Profitability also flipped year over year. For the period ended Sept. 30, the company earned net income of $62 million - equal to 45 cents a share - whereas a year earlier it posted a loss of $99 million, amounting to a 76-cent loss per share. Adjusted earnings per share were 93 cents, topping the 79 cents forecast.

Customer metrics moved higher. Active customers increased 4.7% to 22.2 million, and orders delivered rose 12.2% to about 11 million.

Why management says growth is sticking

CFO Kate Gulliver told CNBC that momentum is coming from share gains. "We see the overall consumer in the U.S. in this category, we think it's roughly flattish, and so that's our [market] share momentum continuing to build," she said. She added, "We've seen that growth play out."

She pointed to several drivers behind the gains: loyalty from repeat shoppers, newly opened stores, the luxury furniture offering, and a focus on value. On pricing strategy, Gulliver said, "We've been highly promotional for the last few years, and the promotional activity this year is actually very consistent with last year." She continued, "It maintains this sort of momentum on promotional activity this year."

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Gulliver said the gains are translating into results further down the income statement: "We've seen that flow through to EBITDA, ultimately to net income positive this quarter, which is really another key piece in the story and the momentum here, so we feel very good about the quarter of the performance."

What investors should watch

This update arrived while the housing market stays sluggish, yet the company says it has posted steady growth over the past year. Heading into the holiday quarter, management plans to keep promotions similar to last year and is confident its mix of prices and products will attract a broad set of shoppers.

For portfolios, the quarter showed U.S. strength, upside to estimates, a swing to positive net income, and healthier customer and order trends. The hinge now is whether those share gains and steady promotions carry through the holidays.

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