-- Wayfair (W) shares tumbled Thursday after the company's first-quarter adjusted earnings fell short of Wall Street's estimates as it navigates a tough macro backdrop amid a "choppy" start to 2026 for the home furnishings category.
The online furniture and home goods retailer's adjusted earnings rose to $0.26 a share for the March quarter from $0.10 a year earlier. Those results missed the Street's views for $0.28. Revenue increased 7.4% to $2.93 billion, exceeding the Street's projections for $2.89 billion.
The home furnishings category saw a "choppy" start to the year amid weather disruptions and higher fuel prices that slowed down consumer spending, Chief Executive Niraj Shah said on an earnings conference call, according to a FactSet transcript.
Wayfair expects the category to have been down in the low-single-digit range for the first quarter. This suggests the company outperformed the market by "a high-single-digit spread," according to Shah.
"This is a cyclical category, which is clearly in a down cycle," Shah told analysts. "While we believe we're due for a mean reversion, the timing remains hard to predict."
Wayfair shares were down nearly 12% in Thursday afternoon trade. The stock has slumped 35% so far this year.
The company saw first-quarter order growth of 3%, compared with a year earlier, Chief Financial Officer Kate Gulliver said on the call. "Within that, we saw a new order of growth of nearly 7% in the quarter, our best result since 2021, and saw our active customer growth finally flip to positive year-over-year after multiple quarters of positive sequential growth."
For the ongoing quarter, Wayfair expects top-line to grow by mid-single digits year over year, Gulliver told analysts.
"We're looking at a category that has been volatile in April so far, trending down in the mid-single-digit range," Gulliver said. "Our share spread has been holding nicely in the high-single-digit range."
Energy prices have surged following the US-Israel war with Iran that has left the crucial Strait of Hormuz effectively closed. The conflict paused following a recent ceasefire between Washington and Tehran, but a framework for a permanent truce is yet to be reached.
"We're continuing to closely watch the broader economic implications and how consumers are managing their wallets as they face higher prices at the gas pump," Shah said on the call.
Price: $66.24, Change: $-7.03, Percent Change: -9.59%