Wayfair’s shares are plunging after its chief executive said on an earnings call that demand for household goods is at the level of the “financial crisis.”
The struggling online furnishings giant reported second quarter earnings on Thursday that missed Wall Street’s expectations on both the top and bottom, sending its shares down by more than 11%.
“Our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis,” Wayfair CEO Niraj Shah said in a press release. “Customers remain cautious in their spending on the home.”
The Boston-based retailer has been struggling since the pandemic ended, and it’s troubles have become more pronounced with the slowdown in new home purchases because of high interest rates and inflation.
A year ago, it slashed 5% of its workforce or 870 jobs and in January it axed another 1,650 jobs, saying it had hired too many people during the pandemic when consumers were investing in their homes.
“I think the reality is that we went overboard in hiring during a strong economic period and veered away from our core principles, and while we have come quite far back to them, we are not quite there,” Shah said in January when the company announced a restructuring plan.
In the quarter ended June 30, Wayfair’s sales fell by 2% to $3.12 billion while reported a loss of $42 million or 34 cents per share.
Wayfair has leaned into discounting to lure back customers.
“We see declines that are similar to the declines that we saw in that 2008 to 2010 period and I think what that speaks to is that the category has been going through just a massive correction, a correction that we’ve previously only seen during a GDP recession,” Wayfair finance chief Kate Gulliver told CNBC in an interview.
On Thursday it was touting 60% off of bedding and bath linens while the industry usually offers a “white sale” or deep discounts on such items in January.