Wayfair released its second quarter financial report, with a gross profit margin of more than 30%

It is learned that on August 2, Wayfair, the US home furnishing e-commerce giant, released its second quarter financial report, which showed that although revenue declined and losses were still incurred, the loss margin had dropped significantly and the gross profit margin had reached a milestone of 31.1%. This shows that Wayfair's cost reduction and efficiency improvement measures have begun to take effect.

In the second quarter, Wayfair's net income fell 3.4% year-on-year to $3.2 billion, but increased 14.3% from the previous quarter. Net income in the U.S. market was $2.8 billion, down 0.4% year-on-year, a decrease of $11 million. Net income in the international market was $386 million, down 20.9% year-on-year, a decrease of $102 million.

At the same time, Wayfair's losses improved significantly in the second quarter.

The financial report shows that Wayfair's net loss in the second quarter was US$46 million, compared with US$378 million last year, and its operating loss was US$142 million, compared with US$372 million in the same period last year.

The reduction in losses is partly due to an increase in order volume and a decrease in costs. Wayfair's gross profit was $985 million in the second quarter, up nearly 10%, and its gross profit margin, or the proportion of gross profit to total net income, reached 31.1%. Wayfair only achieved a similar gross profit margin level during the peak of the epidemic in 2020.

The financial report shows that in the second quarter, Wayfair delivered more than 10 million orders, a year-on-year increase of 3%. The number of orders per customer was 1.82, down from 1.85 in the same period last year. The number of orders placed by repeat customers accounted for 80.1%, reaching 8.3 million, an increase from 78.6% last year.

Additionally, Wayfair's cost of goods sold fell 8.4% to $2.2 billion in the second quarter. The average order value in the second quarter was $307, down from $330 in the same period last year. In the second quarter of 2023, 61.6% of total orders were placed via mobile devices, compared to 59.0% in the same period of 2022.

At a time when demand for home furnishings in the U.S. is slowing and competition is growing, IKEA announced earlier this year that it would invest more than $2.2 billion to boost its omnichannel growth strategy in the U.S., including opening new stores and strengthening its delivery network.

This week, Overstock officially renamed its e-commerce website Bed Bath & Beyond and plans to expand its product categories to offer furniture and other home product categories such as rugs, lighting and decor, thereby directly competing with Wayfair.

Therefore, home furnishing retailers need to increase their investment in marketing to acquire and retain customers. In the past, huge investments in marketing led to huge losses for Wayfair. But in the second quarter, Wayfair's advertising expenditure decreased by nearly 7% year-on-year to US$352 million, accounting for 11% of net income, but increased by 7.6% month-on-month.

It is worth noting that Wayfair's number of active customers in the second quarter was 21.8 million, a year-on-year decrease of 7.6%, continuing its downward trend.

According to Wayfair's CEO, the improvement in earnings is the result of the company's continued efforts to reduce costs, but the outlook remains bleak. Excluding the profit from $1 billion in debt amortization, Wayfair's net loss was still as high as $146 million and its operating loss was $142 million.

Wayfair has accumulated a lot of debt over the years, and despite better earnings in the second quarter, it will take a very long time to get out of its financial predicament. After the earnings report was released, Wayfair's stock price reached $90.71, the highest level since May 2022

Editor✎ Ashley/

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