Wayfair plans to cut 1,650 jobs, representing about 13% of its global workforce and 19% of its corporate team.
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Wayfair,
the online home furnishings retailer, said it would be cutting 1,650 jobs, acknowledging that it “went overboard in hiring during a strong economic period.”
Wayfair
said in a filing with the Securities and Exchange Commission that the job cuts represent 13% of its global workforce and 19% of its corporate team. The company expects the action will lead to annualized cost savings of more than $280 million.
“Although we’ve taken important steps to get ourselves optimized to win and fit for the future, the reality is they have not gotten us to where we need to be, which is to have a clean organizational model that provides a healthy foundation to grow from,” Chief Executive Niraj Shah said in an email to
Wayfair
employees.
The workforce reductions will cost the company between $70 million and $80 million in severance and benefit expenses, which should mostly be incurred in the fourth quarter. However, Wayfair expects to now deliver more than $600 million of adjusted earnings before interest, taxes, depreciation, and amortization in fiscal 2024. Analysts had been estimating $479 million.
The layoff announcement comes after Shah asked employees in a now viral memo to work harder, according to a report from The Wall Street Journal.
“Working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded with success,” Shah said in the December memo.
Shah said in the SEC filing on Friday that “although persistent category weakness makes revenue growth challenging, we remain encouraged by the share gains we continue to see.”
U.S. retail sales climbed 0.6% in December from November, more than economists’ expectations. However, sales at furniture and home furnishing stores dropped 2.8% during the period, falling 5.4% year over year.
Evercore ISI analyst Oliver Wintermantel maintained his In Line rating and $70 price target on the stock. The analyst wrote in a research note that “the home furnishing category remains weak, which makes revenue growth challenging for Wayfair in 2024.”
Shares of Wayfair rose 11% to $56.38.
Write to Angela Palumbo at [email protected]
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