The CEO of Wayfair compared the company’s disappointing sales report to trends they saw during the 2008 recession, saying that consumers are still “cautious” about spending money, as fears of a recession across the US economy mount.
The e-commerce home furnishings and goods retailer reported a loss of $42 million during the second quarter of the year – still slightly better than its reported loss in the same quarter last year.
CEO and co-founder Niraj Shah said in a statement that “customers remain cautious in their spending on the home” and said credit card data suggests “the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis.”
The Great Recession, the period between 2007 and 2009, was the worst global financial crisis since the Great Depression. During that time, the U.S. housing market crashed ultimately impacting the sales of home furnishings and goods.
The impact was so severe that department stores that accounted for nearly 20 percent of home furnishing sales were forced to file for bankruptcy in 2009, according to a New York Times report. Hundreds of franchise stores closed locations and layoffs seemed imminent.
The economy today is nowhere near as bad as it was during the Great Recession. But inflation combined with high interest rates have hindered consumers’ motivation to buy new homes and furnish them or purchase furniture unnecessarily.
Wayfair has implemented staff layoffs to support its profitability goals. The company has also used discounts to attract customers.
But there may be good news on the horizon as Federal Reserve Chair Jerome Powell hinted that they may cut interest rates in the fall as inflation appears to be downturning.
As of Thursday morning, Wayfair’s shares were down 3.7 percent – likely a result of their performance.
“We are running the business with the goal of demonstrating substantial growth in profitability this year, even as the top line remains challenging. And that will be our mindset every year going forward as well,” Shah said.
