A whole lot of homes will look vastly different come holiday picture time as people — accumulating more time indoors than ever before — continue to spend like drunken sailors to upgrade their furniture during the COVID-19 pandemic.
That’s the main read from the first round of third quarter earnings by online home furnishings heavyweights such as Wayfair (W) and Etsy (ETSY). Wayfair shares surged 8% on Tuesday as the company embarrassed Wall Street profit estimates by an insane $1.50. U.S. sales surged 66.5% year-over-year, while the number of active customers spiked 50.9% to 28.8 million.
“The home category is seeing broad-based demand as our customers reprioritize their spending on where and how they live and away from other experiences like travel, entertainment, and dining. To the extent that de-urbanization trends continue to gain traction, these should in the near to intermediate term prove an additional tailwind for the category,” Wayfair co-founder and CEO Niraj Shah told analysts on a conference call. “Importantly, demand for home goods remains broad based. We continue to see that the vast majority of the various subcategories or classes of Home are growing nicely.”
Pandemic-related buying has helped Wayfair shed some concerns on the Street that it couldn’t consistently turn a profit. For the nine months ended September 30, Wayfair has racked up $683 million in adjusted operating profits. Last year for that same timespan, the company clocked in with a $316 million adjusted operating loss.
Wayfair shares are up a cool 203% year-to-date, according to Yahoo Finance Premium data.
The home furnishings spending boom continues to be seen at Etsy, too.
Etsy reported last week that third quarter earnings smashed Wall Street estimates by 13 cents. Sales and adjusted operating profits exploded 128.1% and 259.9%, respectively, versus the prior year.
Company executives called out strength in the home furnishings business in the third quarter, which extended into October.
“Home furnishings [sales] continues to be up over 120% year-over-year, but we're seeing different kinds of items,” Etsy CEO Josh Silverman told analysts on a conference call. “What we're seeing even in October now, is things are good for outdoor gatherings, blankets or fire pits.”
But it’s not just Wayfair and Etsy playing in the furnishings boom. Discount retailers such as Walmart and Target continue to notch strong gains in the category, ditto TJX Companies and Bed Bath & Beyond.
And that shows up in government retail sales data.
Retail sales in the furniture and home furnishing category skyrocketed 158% in September from the 2020 lows reached in April, per data from the Census Bureau.
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