Wayfair CEO says demand for household goods has reached ‘great financial crisis’ levels

Wayfair shares are falling after the company’s CEO said during a financial results conference call that demand for home goods is at “financial crisis” levels.

The ailing online furniture giant reported second-quarter results on Thursday that fell short of Wall Street expectations on both the stock and earnings front, sending its shares down more than 11%.

“Our credit card data suggests that the category adjustment now reflects the extent of the peak-to-trough decline the home furnishings industry experienced during the Great Financial Crisis,” Wayfair CEO Niraj Shah said in a press release. “Consumers remain cautious about spending on the home.”

The Boston-based retailer has struggled since the pandemic ended, and its troubles have become even more apparent as new home purchases have slowed due to high interest rates and inflation.

A year ago, the company laid off 5% of its workforce, or 870 people, and in January it cut another 1,650, saying it had hired too many people during the pandemic when consumers were investing in their homes.

“I think the truth is that we over-hired in the good times and got away from our core principles. And while we’re back to a lot of those, we’re not quite where we need to be,” Shah said in January when the company announced its restructuring plan.

In the quarter ended June 30, Wayfair’s sales fell 2% to $3.12 billion, and the company reported a loss of $42 million, or 34 cents per share.

Wayfair has started using discounts to attract repeat customers.

“We’re seeing declines similar to what we saw in 2008 to 2010, and I think that’s an indication that the category is going through a huge correction, a correction that we’ve only seen before in a GDP recession,” Wayfair CFO Kate Gulliver told CNBC.

On Thursday, the company touted 60% off bedding and bath towels, a time when the industry typically offers a “white sale” or deep discounts on such items in January.