Wayfair, a furniture and home goods e-commerce company, revealed on Friday, Jan. 19, that it is laying off 13% of its worldwide staff as part of its ongoing attempts to streamline operations and eliminate redundant management levels. It also aims to save expenses after its excessive corporate recruiting during the COVID-19 pandemic.
According to the corporation, about 1,650 workers would be let go. This includes 19% of the corporate team, particularly emphasizing those in managerial and leadership roles.
As per a CNBC report, this is Wayfair's third reorganization since the summer of 2022, and the business estimates that it will save $280 million as a result.
Right after the news broke, Wayfair stock jumped 15% in premarket trading.
Niraj Shah, CEO and co-founder of Wayfair, said in a statement: "The changes announced today reflect a return to our core principles on resource allocation. Although persistent category weakness makes revenue growth challenging, we remain encouraged by the share gains we continue to see."
Wayfair said the layoffs had nothing to do with the company's success in the fourth quarter and was instead an effort to return to its foundational principles.
Aggressive Recruitment During Pandemic
Wayfair saw a meteoric rise in sales during the outbreak as shoppers, cooped up at home, spent their incentive funds and savings on furniture and home design. In a statement to staff on Friday, Shah said that at the time, the company's yearly revenues increased from $9 billion to $18 billion "almost overnight" and that to fulfill the demand, it needed to double its workforce.
But when the virus' impact started to fade, demand for household products as a whole began to decline. So, Wayfair has had to lay off some workers to ensure its workforce is appropriately sized for its company.
As part of its most recent round of layoffs, the corporation aimed to remove top executives from certain departments that it said had "too much time" and wasted it holding meetings rather than carrying out their duties. Wayfair also intends to rightsize the ratio of engineers to engineer partners in business, product, design, research, and analytics jobs.
In 2024, Wayfair anticipates generating $600 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), up from $450 million in 2023, assuming sales stays unchanged, as reported by CNBC.
Slow Demand and Economic Uncertainty
Retailers are battling sluggish demand and an uncertain economy, which has led to layoffs at Hasbro, Etsy, and Macy's, among others.
Midway through the Christmas shopping season, Hasbro let off 1,100 employees and Etsy 225. Macy's also said on Thursday, January 18, that it will lay off more than 2,300 people, or 3.5% of its total. Additionally, five locations of the department store chain will be shuttering soon.
