Wayfair Inc (NYSE:W) appears to be on pace for mid-single-digit revenue growth in the second quarter, according to Jefferies, though the firm maintained a cautious outlook for the second half of the year based on weakening forward demand indicators.
Jefferies reiterated its ‘Hold’ rating on the online home furnishings retailer, citing website traffic data through May that suggests the company is tracking toward approximately 5% year-over-year growth for the current quarter. The brokerage noted that management had previously guided for mid-single-digit growth in Q2.
Jefferies wrote that web traffic across Wayfair's brands and geographic markets showed a modest sequential improvement from April into May on both one-year and two-year stacked comparisons.
Luxury-focused banner Perigold continued to outperform, posting more than 70% growth in visits, while the core Wayfair.com platform also improved. Traffic trends across specialty brands, including Birch Lane, AllModern, and Joss & Main, were described as mixed.
Despite the stronger traffic trends, the firm expressed caution about the sustainability of growth in the back half of 2026. Jefferies pointed to survey data on consumer purchase intentions, which showed buying propensity declined year over year in May, marking the third consecutive month of annual declines.
The analysts wrote that these leading indicators support their view that revenue growth could remain around the mid-single-digit range rather than accelerate above that level as Wayfair enters what it described as its most challenging year-over-year comparisons.
Jefferies also noted that a growing share of Wayfair's traffic appears to be driven by paid advertising. According to its analysis, traffic from paid sources increased 37% year over year in May, up from 29% growth in April. As a result, the firm believes the lower end of the company's advertising spending guidance for the second quarter may be difficult to achieve and reiterated its forecast for ad spending to represent 11.1% of revenue.
Looking ahead, Jefferies said Wayfair may face a tougher operating environment as the benefits from earlier industry pricing dynamics begin to fade. The brokerage noted that many of Wayfair's suppliers had initially been reluctant to raise prices, helping the company maintain sales momentum relative to traditional home furnishings retailers. However, it wrote that this advantage could become harder to sustain over time.
The firm also highlighted rising fuel costs as a potential headwind for demand, particularly for lower-priced discretionary home goods.
As part of its analysis, Jefferies said it found a positive correlation between changes in consumer buying propensity and Wayfair's subsequent quarterly revenue growth, reinforcing its view that current survey trends point to limited upside for sales growth in the second half of the year.
Shares of Wayfair traded down about 5% at $69 on Wednesday afternoon, down more than 31% so far this year.