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The coronavirus gives Chewy and Wayfair a lift and some breathing room

April 6, 2020, 7:30 PM UTC

Add Chewy and Wayfair to the small list of retailers getting a boost from the coronavirus lockdown.

Wayfair on Monday said that its revenue growth since the pandemic shut down a big chunk of American life in mid-March has doubled its rate of nearly 20% from the first two months of 2020. That suggests a big jump for the online furniture store as people invest in their home offices and pass some time in quarantine sprucing up their surroundings.

The update sent Wayfair’s battered shares up 39% in midday trading to just over $70.

Yet despite that increase, they’re still worth less than half of what they were a year ago. The relief rally in the Wayfair stock comes a few weeks after the company suggested the outbreak of the virus in China, where 50% of what it sells is made, could disrupt the flow of goods from suppliers to stores.

Wayfair has also struggled to convince Wall Street it can ever turn a profit with its growth-at-all-costs model: In 2019, it lost nearly $1 billion on revenue of $9.13 billion, up 35% over 2018, with heavy spending on advertising to the tune of $1 billion, something Wayfair has pledged to be more strategic about. The company recently laid off 550 workers to rein in its costs.

While American consumers have drastically cut back on discretionary items like clothing in the past month, the need to set up better home offices (all the more given all the Zoom conference calls) as tens of millions work from home indefinitely or beautify homes people are spending enormous amount of time in is proving to be a boon for Wayfair.

What’s more, with stores dark at key rivals like Bed Bath & Beyond, Kohl’s, Macy’s, and Crate & Barrel, Wayfair has less competition to contend with. According to Digital Commerce 360, some 23% of home goods sales in 2018 were online, meaning most of its competition has been sidelined.

“Wayfair’s e-commerce model is uniquely suited to serving customers’ very real needs at this challenging time,” the company’s chief executive, Niraj Shah, said. Wayfair will provide a full fourth-quarter results report in May.

Similarly to Wayfair, Chewy has also been an e-commerce darling, dominating the online pet product market, but doing so unprofitably. Last week, Chewy said that revenue rose 40% in 2019 to just under $5 billion, with a net loss of $252 million.

But the company also reported a surge in revenue in recent weeks as customers reticent to go to stores simply bought items online. Bloomberg News recently reported a surge in pet adoptions in the United States as the pandemic worsened. And new shoppers tend to stick with Chewy once they’ve tried it: 70% of sales come from shoppers using its auto-replenish feature.

“We are seeing a meaningful lift in new customers migrating to our platform as social distancing is practiced more and more,” Chewy CEO Sumit Singh told Yahoo Finance last week, noting that gross margins have improved. The company is also giving itself more time to make its deliveries, given the surge in demand.

Like Wayfair, Chewy has lost hundreds of millions as it carried out its land grab and is under the gun to show Wall Street it can eventually become profitable. Both companies appear to have gotten some unexpected help from the pandemic, perhaps because go-tos like Amazon are focusing efforts on essential supplies right now.

More must-read retail coverage from Fortune:

Which stores are open—and closed—during the coronavirus pandemic in the U.S.?
—How re-commerce players like Poshmark and eBay are adapting to the coronavirus
—How Nike is overcoming the coronavirus impact on its China business
—It may be a while before many of America’s stores open again
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: The greatest designs of modern times

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