Wayfair stock jumps 30% as retailer posts strongest U.S. growth since 2020

Wayfair on Tuesday said it saw its strongest growth in the U.S. and best free cash flow since the pandemic during its second quarter, as the online furniture company continues to take market share from legacy brick-and-mortar retailers.

In the three months ended June 30, sales in Wayfair's largest market grew 8.7% to $3.1 billion – the most the region has grown since 2020. That year, the overall home goods industry surged and Wayfair's business grew 55%.

The second-quarter sales bump helped Wayfair's profitability, as free cash flow reached $301 million during the quarter, also the strongest the company has seen since 2020.

During its call with analysts, Wayfair said it expects its sales momentum to continue during the current quarter with "high single-digit" percentage revenue growth. Analysts had been looking for 5% sales growth, according to LSEG. It expects gross margin to be between 29.5% and 30.5%.

In an interview with CNBC, Wayfair's finance chief, Kate Gulliver, said the company is growing by taking market share, primarily from traditional brick-and-mortar competitors, as the housing market remains "stalled."

It's also winning over more luxury consumers through its high-end brand Perigold, CEO Niraj Shah said in a news release.

"We saw noteworthy outperformance from our specialty retail brands, which grew by nearly 20% in the second quarter, and Perigold, which grew by more than 35%," said Shah. "We are excited to see ramping growth in the Wayfair business and complementing that with outsized growth from our specialty and luxury brands, all building to why we expect to see even further acceleration as our numerous initiatives play out."

Here's how Wayfair performed during the quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG: