BOSTON — Wayfair is cutting an additional 1,750 jobs — 10% of its global workforce — as the multi-format home goods retailer moves forward with its $1.4 billion cost-restructuring plan started last summer.
About 18% of those jobs, representing about 1,200 employees, are from Wayfair’s corporate staff. According to the company, the changes reflect efforts to eliminate layers of management and make the business more agile. Along with its prior restructuring in August, the jobs cuts represent about $750 million in annualized cost savings.
Wayfair will incur between $68 million and $78 million in costs, primarily for severance and benefits, related to the layoffs, most of which will impact the first quarter of 2023.
“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. “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 hindsight,” he said, “similar to our technology peers, we scaled our spend too quickly over the past few years. 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.”
In a letter to employees released today, Shah said conversations related to the layoffs had begun in Europe, and North American workers would receive an email letting them know if their job was impacted. “All impacted employees will be part of conversations today to talk about next steps,” he wrote.
In explaining the second organization reduction in less than six months, Shah wrote that, over time, “we complicated things, lost sight of some of fundamentals and simply grew too big. The changes today are largely about reducing management layers, right-sizing in certain places and reorganizing to be more efficient. We’re adjusting the ratio of leaders to team leaders in areas like Talent and Technology and adjusting the Talent team to match the size of our organization.”
Financial and staffing changes, he wrote, “streamline our business and enable us to drive even sharper retail pricing and assist growth. Importantly, we do not believe these changes reduce our addressable market or long-term opportunity, and we are continuing to invest in the future. We are not sacrificing tomorrow while we refocus today.”
Looking at recent performance, Shah said in December, year-over-year gross revenue improved compared with November. “We are encouraged by our recent topline performance and in particular the momentum of orders,” he said, noting market share continues to improve in relationship to strengthening within the company’s core offerings.
With these reductions, the company expects to reach its adjusted EBITDA earlier in 2023. Wayfair, which encompasses the Wayfair, Joss & Main, AllModern, Birch Lane, Perigold and Wayfair Professional brands, will provide full results for the quarter and year ended Dec. 31 on its February earnings call.
Additional details on the cost plan include:
- About $750 million in annualized labor reductions, including cash and stock-based compensation, relative to second quarter 2022 levels;
- About $500 million of annualized operation cost savings already underway, with full realization anticipated by late 2023;
- In excess of $150 million in identified annualized reductions relative to previously planned non-cost of goods sold, non-labor spending, including advertising, capital expenditures and various general and administrative expenses.