The news: Wayfair’s US sales grew 8.7% YoY to $3.1 billion in Q2, its fastest pace since 2020.

• Free cash flow reached $301 million, also its highest level since 2020.
• Adjusted EPS rose 9.2% to 95 cents, topping the 89 cents analysts expected, while overall revenues increased 7.5% to $3.52 billion, beating the $3.47 billion forecast, per LSEG estimates cited by CNBC.

The strategy: Wayfair’s growth is increasingly driven by its ability to attract new customers.

The retailer is leaning into brick-and-mortar. It currently operates three Wayfair stores with plans to open five more next year. These locations act as three-dimensional billboards, boosting brand visibility far beyond traditional advertising and supporting customer acquisition and retention. More than 50% of shoppers at its existing stores are new to Wayfair, CFO Kate Gulliver said on the company’s earnings call.

Its portfolio of brands is also helping attract new customers. Specialty retail brands grew nearly 20% in Q2, while its high-end Perigold label grew more than 35% in the luxury segment. Perigold’s active customer base has reached roughly 400,000, up nearly 20% YoY, with about 40% new to the Wayfair ecosystem, CEO Niraj Shah said. Those customers spend nearly three times as much annually as a typical Wayfair.com shopper.

Implications for retailers: Wayfair is pulling multiple levers to drive growth despite a challenging backdrop. Its brand portfolio and diversified customer acquisition strategy helped it grow its active customer base 3.3% during the quarter, while its loyalty program, launched in 2024, is driving incremental spending in an otherwise infrequent purchase category.

Those efforts are critical as home-related retailers contend with tariffs, elevated mortgage rates, and a sluggish housing environment that has reduced moving and remodeling activity. In that kind of environment, success depends on finding ways to take share rather than waiting for demand to return.