The market value has plummeted by 30 billion in two years! North American home furnishing giants have not yet emerged from the industry's cold winter

The market value has plummeted by 30 billion in two years! North American home furnishing giants have not yet emerged from the industry's cold winter

Wayfair has not had an easy time in the past two years .

 

Although Wayfairy is already an e-commerce giant in the home furnishing vertical category and can compete with Amazon in this regard, it has not prevented its revenue from decreasing and continued losses.

 

The market value has plummeted, leaving only 14% of its peak

 

Recently, Wayfair released its third-quarter 2024 financial report. Compared with the same period last year, the platform's revenue and number of active users in the third quarter decreased, but losses and profits improved.

 

In the third quarter of 2024, Wayfair's revenue reached US$2.884 billion, a year-on-year decrease of 2.0% ; of which domestic revenue in the United States was US$2.5 billion, a year-on-year decrease of 2.3%; overseas revenue was US$372 million, and revenue remained unchanged (calculated at a fixed exchange rate); active users were 21.7 million, a year-on-year decrease of 2.7% ; net loss was US$74 million, and non-GAAP ( non-U.S. generally accepted accounting principles ) adjusted EBITDA ( earnings before interest, taxes, depreciation and amortization ) was US$119 million .

 

In the third quarter of 2023, Wayfair's revenue was US$2.944 billion, of which US$2.6 billion was from the United States and US$372 million was from overseas; there were 22.3 million active users; net loss was US$163 million, and non-GAAP adjusted EBITDA was US$100 million.

 

The good news: compared with the third quarter of last year, this year's losses are smaller and profitability is up;

The bad news: Compared with the third quarter of last year, this year's revenue is lower and there are fewer active users.

 

For ease of viewing, the editor has briefly sorted out Wayfair's data for the first three quarters of 2023 and 2024:

 

( Wayfair 2023 and 2024 data comparison)

 

The good news: losses narrowed in the first three quarters of this year compared with last year, and profitability improved;

The bad news: Revenues in the first three quarters of this year were all down compared to last year.

 

What is most worrying is that the company's market value has shrunk significantly. Due to the surge in demand for home furniture and decoration during the epidemic, Wayfair's market value once exceeded US$35 billion ; but as the epidemic haze dissipated and consumer demand decreased, the company's market value is now less than US$5 billion , only about 14.3% of its peak period.

 

(Data from YCharts)

 

As for Wayfair's third-quarter performance, the company's CEO Niraj Shah was steady: "The third quarter once again demonstrated Wayfair's resilience, and we further expanded our market share in the face of ongoing industry challenges "; "Our goal is to drive adjusted EBITDA to exceed equity-based compensation and capital expenditures, and we are pleased to have made significant improvements in both of these areas ."

 

But the market doesn't seem to think so. As soon as the third-quarter financial report came out this year, many financial institutions lowered their target prices for Wayfair shares.

 

Wayfair has been trying to save itself

 

Wayfair was founded in 2002. As a well-established e-commerce platform that has stood in the red ocean market for more than 20 years, it is now ranked among the top 10 e-commerce platforms in the United States. In the field of furniture and home furnishings alone, Wayfair is in the first echelon.

 

For a company, increased market share and improved profitability are undoubtedly good things, but these two changes alone cannot save a company from decline - because its revenue capacity is equally important.

 

However , since 2022, Wayfair has been in an embarrassing situation of declining revenue for most of the time, with its revenue falling by 10.9% in 2022 and 1.8% in 2023.

 

Of course, Wayfair itself has discovered these problems and has been working to improve its revenue.

 

In February of this year , the platform announced that the generative AI application Decorify had been launched on Apple Vision Pro ; subsequently, Wayfair followed the market and held several major promotions in May, July and October of this year, which also achieved good results.

 

In the "big promotion feast" in October this year alone , the performance of Wayday (10.5-10.9) held by Wayfair exceeded many people's expectations, beating platforms such as Amazon in terms of sales growth and per capita consumer spending.

 

According to the 2024 U.S. Holiday Shopping Early Sales Report released by Earnest Analytics, Wayfair's sales during the October promotion increased by 45.7% compared with the average sales in the four weeks before the event, far exceeding Amazon's 26.1%, making it the first among large retailers in the United States. At the same time, the average consumer spending of platform users reached $316, far surpassing the second-place Best Buy's $199.

 

The news about Wayfair's global store openings also mentioned that the platform's transaction volume reached hundreds of millions of dollars during the Wayday promotion in the fall of 2024, "double-digit growth compared to last year's Wayday, and several times more than usual."

 

In addition, the platform also keeps up with current hot topics and holds various activities. Recently, Wayfair took the opportunity of the Paris Olympics to cooperate with the former Olympic gymnastics champion to launch the "House to Home" series of brand activities.

 

Wayfair also launched a membership program, Wayfair Rewards, with an annual fee of $29. Consumers who participate in the program can not only get a 5% rebate when purchasing goods, but also enjoy other benefits such as free shipping (regardless of the size of the order).

 

In addition, Wayfair also announced that it will close its warehouse in Florence, Kentucky, USA, and lay off 218 employees to optimize operations and control costs.

 

The market is cold and many companies are treading on thin ice

 

The current macroeconomic uncertainty has cast a shadow over the U.S. home furnishing industry, affecting many home furnishing giants, including Wayfair.

 

In the second quarter conference call this year, the company's CEO Niraj Shah said, "Customers remain cautious in spending on home furnishings... The current market downturn is similar to the sharp decline from peak to trough experienced by the home furnishing industry during the financial crisis."

 

Of course, Wayfair isn't the only victim.

 

Conn's HomePlus , which has a history of 134 years , has recently filed for Chapter 11 bankruptcy protection. All brand-name furniture, home electronics and other products on its official website are discounted by up to 30%-50%, and the proceeds from the sales will be used to recover funds.

 

Recently, The Container Store, which had a net sales of $197 million in three months , announced that if it could not reach a cooperation with Beyond and obtain Beyond's $40 million investment, it would consider downsizing, closing down, or even filing for bankruptcy protection.

 

Subsequently, Franchise Group, one of the top 100 retailers in the United States, announced that it had filed for bankruptcy protection and its home furnishing brands might be closed.

 

In addition, in the first half of 2023 alone, at least four large home furnishing companies in the United States declared bankruptcy, and six large home furnishing retailers downsized and laid off more than 21,000 employees.

 

Data from YipitData, a U.S. home furnishing analysis agency, also shows that in the fourth quarter of last year, sales in the U.S. home furnishing retail market fell 4% year-on-year, and this is the eighth consecutive quarter of negative growth in the industry. This situation has not improved this year. Data from May this year showed that the decline in furniture and home furnishing sales was the largest among all retail industries in the United States. It is worth mentioning that in YipitData 's survey, Wayfair is the company with the highest market share in the home furnishing industry, and its market share has also seen a small positive growth.

 

Although the overall macroeconomic environment and home furnishing market recovery will still be slow in 2024, there is still hope in the long run. According to reports, the global furniture e-commerce market revenue has reached US$415 billion, and it is expected to increase to US$455.4 billion by 2025.

 

Wayfair also remains optimistic about the future and expects adjusted EBITDA in 2025 to be higher than in 2024; Wayfair also stated in its financial report that it will continue to focus on improving customer experience, expanding market share, and achieving sustainable profit growth.

Home Furnishing Industry

Wayfair

Revenue

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