• by Sarah Mahoney  @mahoney_sarah, November 5, 2024

Wayfair’s revenues fell again in the third quarter, as they have for eight of the last 10 quarters. However, the ecommerce home furnishings company says that intensified marketing and judicious promotions have led to increased market share and better-than-expected returns on advertising spending.

While sales of the overall furniture and home furnishing market dropped 5.1% in the first nine months of the year, Wayfair is doing better, with this period’s revenue falling 2% to $2.9 billion. And the company trimmed quarterly losses to $74 million, compared to a loss of $163 million in the third quart of last year.

The results “marked another proof point of resilience for Wayfair with further market share capture in the face of sustained challenges in the category,” says Niraj Shah, chief executive officer, co-founder and co-chairman. “Once again, we navigated a dynamic consumer environment while driving further discipline on costs.”

Much of the sector’s struggles involve a stalled real estate market, which is also weighing on companies like Lowe’s and Home Depot. Macroeconomic pressures are also slowing people’s interest in renovation and DIY projects.

Wayfair delivered 9.3 million orders in the quarter, 6.1% fewer than in the year-ago period, while the average order ticked up a bit to $310 from $297 in the third quarter of 2023.

In a call webcast for investors, Shah touted the ongoing success of the “Welcome to the Wayborhood” campaign launched last spring and said the goal is to make sure that when customers are ready to spend more on nest-feathering, Wayfair will be top of mind.

“The core goal across each of our initiatives in 2024 is to foster customer loyalty and spur repeat business while driving economic value. We're not just aiming for short-term gains but building long-lasting relationships with our customers that will be accretive on both the top and bottom lines."

Specifically, Shah praised the Wayborhood campaign’s ability to continually “driving creative content that could exist across our portfolio of advertising channels and serve as a foundation for many years of marketing campaigns to come,” he said. “We've seen very healthy ROI on the first iteration of the campaign. This has translated to positive movement in our core metrics, direct traffic and even more importantly, revenue per direct visits.”

Some observers think Wayfair, which has laid off 13% of its employees in the last few years, is well positioned to keep building share.

While acknowledging that Wayfair’s numbers fell somewhat short of expectations and that the forecast for next quarter is “disappointing,” Seth Basham, an analyst who covers the company for Wedbush, continues to rate Wayfair as likely to outperform its peers.

“Wayfair continues to gain share with the 2% year-over-year sales decline indicating significant outperformance relative to industry’s decline,” he writes in his note. “While this next leg of incremental share gains is likely less impactful and comes with a more direct cost to the company, we believe Wayfair is effectively balancing costs and growth, and its track record of consistent outperformance vs. the industry gives us confidence that it’s making the right call by trading some margin today for volume and market share.”