Wayfair laying off 13% of global workforce

Wayfair Inc. has had another round of job cuts as it continues to cut costs.

The digitally native home furnishings retailer said the decision to lay off approximately 1,650 employees —roughly 13% of its global workforce, including 19% of its corporate team — as of Dec. 31, 2023 follows a series of actions initiated in August 2022, when it reported disappointing quarterly sales results including a 24.1% decline in its customer base.

Having taken what it terms a “comprehensive, organization-wide analysis of the appropriate team size and structure,” Wayfair said it expects these job cuts to deliver annualized cost savings of more than $280 million. 

The latest layoffs follow a round of 1,750 job cuts the company announced in January 2023 and 870 jobs it eliminated in August 2022. In January 2023, Wayfair said it expected to save $750 million a year from the job cuts, including cash and stock-based compensation, with the total cost-cutting plan expected to produce $1.4 billion in annual savings. 

Wayfair also said in January 2023 that the plan is designed to eliminate management layers and reorganize to be more agile.

"The changes announced today reflect a return to our core principles on resource allocation, such as getting fit on spans and layers as well as focusing on our highest priorities,” Niraj Shah, CEO, co-founder and co-chairman of Wayfair, said in a statement about the current layoffs. “As a result, we're reducing team sizes across the organization, as well as reducing seniority in certain roles that we plan to rebuild with modified leveling over the course of this year." 

Shah also said the latest job cuts are part of an increased company focus on growing adjusted EBITDA and free cash flow. In a hypothetical flat revenue environment that included planned rebuilt roles, he said Wayfair would expect to deliver over $600 million of adjusted EBITDA in 2024.

As a result of the workforce reduction, Wayfair expects to incur between approximately $70 million and $80 million of costs, consisting primarily of employee severance and benefit costs, most of which are expected to be incurred in the first quarter of 2024.

• Approximately $150 million of annualized cash compensation savings, roughly $125 million of which will be reflected in the company's Selling, Operations, Technology, General & Administrative (SOTG&A) expense line with the remainder from the Customer Service & Merchant Fees expense line. These are net savings figures incorporating the company's plans to replace some of the eliminated jons during 2024.
• Approximately $80 million of annualized equity-based compensation relief associated with the impacted employees.
• Approximately $50 million of annualized savings related to a reduction in capitalized technology labor, which is accounted for as a component of the company's capital expenditures line item.

Wayfair’s brands include Wayfair, Joss & Main, AllModern, Birch Lane, Perigold, and Wayfair Professional. The company generated $12.2 billion in net revenue for full year 2022 and is headquartered in Boston, with operations throughout North America and Europe.