Wayfair lost more than 1 million customers in the most recent quarter as shoppers stopped buying new furniture and home decor.
The e-commerce retailer said its number of active customers fell 22.6% in the quarter ended Sept. 30 compared with a year earlier.
The company’s sales also fell 9% in the quarter from a year earlier. It lost $283 million.
Shares of Wayfair (W) rose 7% on Thursday as the results were better than Wall Street feared. Still, the company’s shares are down nearly 80% this year.
“Wayfair’s business is sluggish and it’s losing a lot of market share,” said Neil Saunders, an analyst at GlobalData Retail.
The furniture and homewares industry saw a broader slowdown after a boom in 2020 and 2021, when many customers who couldn’t travel or go to the office spent money to redecorate their homes.
Persistent inflation, which hit 8.2% in September, also hit low- and middle-income shoppers, who cut back on discretionary purchases and focused on paying for necessities like groceries, gas and rent.
Wealthier customers are also shifting their spending away from furniture and other goods to travel and services. Mortgage rates have risen sharply, cutting demand for new homes.
“We’re seeing shoppers spending more cautiously as they look for great value and wait for promotions,” Wayfair Chief Executive Niraj Shah said on a conference call with analysts on Thursday.
Wayfair recently said it would cut nearly 900 jobs, or about 5% of its workforce, and suspend international expansion plans.
Other furniture stores were also hit hard by the furniture slowdown, including RH (RH) and Williams-Sonoma (WSM), which own West Elm and Pottery Barn.