Is anyone buying more sofas and beds from Wayfair?

Shoppers have been looking for new couches, beds and decor, remodeling their kitchens and backyards, and investing in their remote work setup. Demand was so high that it severed global supply chains and caused long delays for goods.

All of this meant boom times for online retailers Wayfair (O) and companies such as Williams Sonoma (WSM), HOUR (HOUR), Bed bath and beyond (BBBY), Overstock (OSTBP) and other furniture and homeware chains. Wayfair’s stock jumped 140% in 2020.

Fast forward two years. The picture is very different now.

Inflation has taken advantage of low- and middle-income shoppers, who have cut back on discretionary purchases to focus on paying for basic necessities like groceries, gas and rent. Wealthier customers shifted their spending from furniture and other goods to travel and services. Mortgage rates are rising, reducing demand for new homes.

This puts pressure on Wayfair and other chains that saw sales increase earlier in the pandemic.

Wayfair said Thursday that its sales were down 15% in its latest quarter ending 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 buyers it won at the start of the pandemic. Wayfair posted a net loss of $378 million in the quarter.

‚ÄúCustomers are more deliberate about where their discretionary dollars go, as prices at the gas station and grocery store consume a greater share of [their] portfolio,” Wayfair CEO Niraj Shah said in a call with analysts on Thursday.

“We’ve also seen a lot of those discretionary dollars shift from goods to services, especially travel,” he added.

Shah said customers have been switching to cheaper options and Wayfair has increased promotions to drive demand.

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