What happened
Shares of Wayfair (W 2.08%) were surging last month after the online home furnishings retailer posted a favorable sales update and benefited from positive analyst notes and the bankruptcy of Bed Bath & Beyond, one of its biggest pure-play competitors.
The stock has been struggling since the pandemic-era boom, but those events showed that the company could finally be turning the corner after several months of sales declines.
As a result, the stock was up 61% in June, according to data from S&P Global Market Intelligence.
As you can see from the chart, the stock rose steadily over the course of the month.
So what
The biggest news from Wayfair in the quarter was its business update, showing that sales trends are improving. In a press release announcing Jon Blotner as its new chief commercial officer, Wayfair also said that quarter-to-date gross revenue is strengthening, and is now in the negative-mid-single-digit percentage range year over year.
Management also noted that total order growth had turned positive year over year, even as average order values remain down. Additionally, it said it's on track for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) profits in the second quarter.
Analysts responded positively to the update, with Citigroup putting it on its "upside 90-day catalyst watch," and two other analysts also raised their price targets on the stock.
Later in the month, the stock gained again after Bed Bath & Beyond filed for bankruptcy, which should put market share up for grabs in the home furnishings industry. The news earned an analyst upgrade from MoffettNathanson, which raised its rating on Wayfair from underperform to market perform, arguing that the company is experiencing a material benefit from the bankruptcy of Bed Bath & Beyond and that it's gaining share in search, as BB&B is no longer bidding on paid searches.
Now what
After booming during the pandemic, Wayfair stock has crashed since 2021 as consumer spending shifted away from home goods and e-commerce, and the company has reported several quarters of declining sales since then.
Though the update shows that Wayfair's sales fell again in the second quarter, the positive order volume should be encouraging to investors, as it shows demand for its products is coming back, and the Bed Bath & Beyond bankruptcy should give it an additional boost. The market recovery also seems to be supporting the stock.
Wayfair will eventually get back to revenue growth, and if the bottom line keeps improving, the stock should have more gains in store.
