Kelly Clarkson Ads Couldn't Save Wayfair As Sales Plunge Back to 2008 Levels (Stock Drops -10%)

Wayfair CEO Niraj Shah just threw down the gauntlet with a rather scary comparison that might make you have flashbacks (depending on your age): the current home goods slump is on par with the 2008 financial crisis. Yes, you read that right. Apparently, buying a couch in 2024 feels a lot like buying a house in 2010—scary. This caused the stock to drop over 10% two minutes after the market opened.

“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,” Shah announced, you know, the CEO who got canceled last Christmas for using a holiday greeting to tell his employees to work harder. “Customers remain cautious in their spending on the home.”

Well, no kidding, Niraj. Customers are clutching their wallets tighter than ever because if their experience was anything like mine, they’re still regretting that $1,200 Wayfair recliner. Let me tell you, it’s about as comfortable as sitting on the floor. I can’t even begin to count how many arguments this overpriced piece of junk has caused in my house. And to top it off, I’m still trying to offload it on Facebook Marketplace—but so far, no takers.

Anyway, not even Kelly Clarkson’s charm could help Wayfair hit Wall Street’s mark on revenue and earnings. Despite a slightly less depressing loss of $42 million (down from last year’s $46 million), Wayfair’s revenue dipped from $3.17 billion to $3.12 billion. Even though they nudged the average order value up a bit from $307 to $313, it wasn’t exactly something to write home about as my Grandpa would say.

Jokes aside, I’m sure it’s been a rough year for the home goods sector. High interest rates and home prices barely budging have put a wet blanket on the housing market, and with fewer people buying homes, there’s less need for new furniture. The more and more people I talk to, I’m convinced that the middle class just doesn’t have any money to spend anymore.

Wayfair is pulling out all the stops with hefty discounts to lure customers back in, but don’t hold your breath for a resurgence until interest rates drop and the housing market perks up. As Wayfair’s finance chief Kate Gulliver put it, “We see declines that are similar to the declines that we saw in that 2008 to 2010 period... this is somewhat unique to this category.” Unique or not, it’s a tough pill to swallow.

There's a glimmer of hope, though. Fed Chair Jerome Powell hinted at potential interest rate cuts if the economy stays on track. As for Wayfair, it seems the “work harder” Christmas message didn’t quite hit the mark—because right after that, the CEO decided to trim costs by laying off 10% of his employees. Merry Christmas, folks! Despite these challenges, Shah remains hopeful, noting the quarter was the best for free cash flow generation and adjusted EBITDA in three years, hitting $163 million, just shy of Wall Street’s $168 million target.

And for the ladies who are reading this article, you’ll enjoy this piece of news. To help weather this Great Financial Crisis storm, Wayfair is taking a page out of Ikea’s book and opening its first outlet store near Chicago this fall, offering returned and discounted items. Wayfair shares are down 16% year to date.

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