(Reuters) – Shares of online furniture retailer Wayfair Inc soared as much as 35% to hit a record high on Tuesday after posting better-than-expected quarterly results, as more consumers took to renovating and furnishing their homes while being stuck indoors due to the COVID-19 pandemic.
The shelter-in-place orders have boosted demand for essential products, including home office products, cookware and kitchen appliances and children’s furniture, at a time when most Americans are working from home and limiting their time outdoors.
“Home is becoming an area that customers are disproportionately investing into, and I would expect that to persist for a while,” Chief Executive Officer Niraj Shah said on a post earnings call.
Wayfair said it saw a pickup in both traffic and sales starting in mid-March. Its executives added that the sales momentum has carried into the current quarter, with its quarter-to-date gross revenue growth trending up roughly 90% from a year earlier.
“We are seeing not just robust new customer acquisition but also strong repeat trends from both long-term loyal and recently added new customers,” Chief Financial Officer Michael Fleisher said.
The Joss & Main furniture e-store owner has also been benefiting from the temporary closure of physical furniture stores in the United States, as it posted a 19.8% increase in sales in the first quarter ended March 31, helped by a surge in orders in the month of March.
Fleisher, however, said Wayfair’s performance thus far puts it on a trajectory to achieving positive consolidated adjusted EBITDA margin in the second quarter even without the impact of the virus-led rise in sales it is experiencing.
Wells Fargo analyst Zachary Fadem said Wayfair, in an unexpected fashion, delivered a narrative-changing message, as recent cost efforts are bearing fruit in the form of a second-quarter profit inflection.
The company’s first-quarter net sales of $2.33 billion beat Wall Street estimates of $2.31 billion, according to IBES data from Refinitiv.
Wayfair also said the number of active customers in its direct retail business increased 28.6% to 21.1 million as at the end of the quarter, from a year ago.
The company, however, posted a net loss of $2.30 per share, but was smaller than the average analysts’ estimates of a loss of $2.60 per share.
Wayfair’s shares, which have increased over 81% this year, were up 22.2% at $163.89.
(Reporting by Praveen Paramasivam in Bengaluru; Editing by Shailesh Kuber)