Does anyone buy sofas and beds from Wayfair?

Shoppers were buying new sofas, beds and décor, remodeling their kitchens and yards, and investing in remote work. Demand was so high that it disrupted global supply chains and caused long delays in goods.

All this meant a boom for online stores. Wafer (Tue) and companies like Williams-Sonoma (VSM), Right side (Right side), Bed Bath and more (BBBI), In stock (OSTBP) and other chain stores of furniture and household goods. Wayfair shares jumped 140% in 2020.

Let’s fast forward two years. Now the picture looks very different.

Inflation has squeezed out low- and middle-income shoppers who have reduced their discretionary shopping to focus on paying for essentials like groceries, gas and rent. Wealthier clients have shifted their spending away from furniture and other goods to travel and services. Mortgage rates are rising, reducing demand for new homes.

This is putting pressure on Wayfair and other chains that saw a surge in sales earlier during the pandemic.

Wayfair said on Thursday that its sales were down 15% during the most recent quarter ended June 30 compared to the same period last year; it also lost 24% of its active customers, a sign that the company is struggling to retain the customers it acquired at the start of the pandemic. Wayfair posted a net loss of $378 million for the quarter.

“Customers have become more prudent about where their discretionary dollars go as prices at gas stations and grocery stores eat up a larger share of [their] wallet,” Wayfair CEO Niraj Shah said in a phone call with analysts on Thursday.

“We have also seen many of those discretionary dollars move away from goods to services, especially travel,” he added.

Shah said customers are switching to cheaper options and Wayfair is ramping up promotions to spur demand.

Wayfair shares are down over 60% this year, while RH shares are down 45% and Bed Bath & Beyond are down 57%. Williams-Sonoma, which also includes West Elm and Pottery Barn, fell 13%.