Wayfair laying off 10% of workforce as part of broader cost-cutting plan
Wayfair is laying off workers as consumers become more selective about discretionary purchases and demand for home goods continues to weaken.
The online home furnishings giant said it is laying off approximately 1,750 employees — representing 10% of its global workforce as of the end of 2022 —as part of its previously announced cost-cutting plan. Wayfair expects to save $750 million a year from the job cuts, including cash and stock-based compensation.
The company’s total cost-cutting plan is expected to result in $1.4 billion in annual savings. Wayfair said the plan is designed to eliminate management layers and reorganize to be more agile. In August, Wayfair it was cutting about 870 jobs, or about 5% of its global workforce at that time. as its looked trim.
“Although difficult, these are important decisions to get back to our 20-year roots as a focused, lean company premised on high ambitions and great execution,” said Niraj Shah, CEO, co-founder, and co-chairman, Wayfair. “The changes announced today strengthen our future without reducing our total addressable market, our strategic objectives, or our ability to deliver them over time.”
In his statement, Shah compared Wayfair to technology companies, many of which, including Amazon, Microsoft and Google, recently announced job cuts.
“In hindsight, similar to our technology peers, we scaled our spend too quickly over the last few years, he said. “The good news for Wayfair is that we have operated in a highly productive and efficient way for the vast majority of our 20 year history, and we are now simply returning to that.”
Wayfair faced challenges in 2022 as demand for home goods waned from early pandemic highs. A pullback in consumer spending on discretionary spending amid inflation has added to its problems.
For its third quarter, ended Sept. 30, Wayfair reported total net revenue of $2.8 billion, down 9.0% year-over-year. Active customers fell 22.6% to 22.6 million. The retailer’s operating loss in the period grew to $372 million from $70 million. Net loss grew to $283 million from $78 million.
In his remarks, Shaw struck a positive note and said Wayfair’s business momentum continues to strengthen, with year-over-year gross revenue trends experienced a further improvement in December compared to November.
“We are encouraged by our recent topline performance and in particular the momentum in orders,” he said. “Our market share continues to improve as our core offering strengthens across key dimensions such as availability, speed, and price.”
As a result of the workforce reduction, Wayfair expects to incur between approximately $68 million and $78 million of costs, consisting primarily of employee severance and benefit costs, most of which are expected to be incurred in the first quarter of 2023.
Based in Boston, Wayfair generated $12.4 billion in net revenue for the twelve months ended September 30, 2022. The company’s brand portfolio includes Wayfair, Joss & Main, AllModern, Birch Lane, Perigold and Wayfair Professional.