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Wayfair CEO: Spending A Lot On Advertising Is Driving New Customer Growth

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Wayfair Inc (NYSE: W) reported its first quarter earnings on Monday. Adjusted EPS came in at a $0.23 loss per share on revenue of $424.4 million, while analysts were expecting an EPS loss of $0.26 per share on revenue of $390 million.

Niraj Shah, Wayfair co-founder and CEO, was on CNBC to weigh in on the results.

Growth Drivers

“You know it’s all organic and to be honest our direct retail business, which is the biggest, over 80-85 percent of our business is actually up 63 percent,” Shah said. “And we have a legacy piece of our business that’s not really growing purposefully and it’s because we basically offer something that others don’t offer and online is taking share.”

Advertising

On how much is advertising fueling growth of the company, Shah said, “What’s happening, we are spending a lot on advertising that’s really driving the new customer growth and then if you look at our repeat metrics what’s happening is customers are coming back more and more often and new customers times the repeat rate gains is really the revenue growth."

Core Customer

Shah was asked what kind of customer he will describe as the core customers for Wayfair. He replied, “Our core customer is a woman, sort of household income wise, sort of think of $60,000 to $175,000, think of the peak of that bell curve being $90,000 household income.”

“And it’s basically a woman who wants her house to look special be unique and frankly is not well served by the other choices out there in terms of access to selection, great service while still being affordable in terms of the goods.”

 

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Posted-In: CNBC Niraj ShahMedia