U.S. online retailer Wayfair is laying off 870 employees globally, representing around 5% of its total workforce.
The online furniture retailer claimed, in a regulatory filing with the United States Securities and Exchange Commission (SEC), “On August 19, 2022, Wayfair Inc. (“Wayfair”, the “Company”, “we” or “our”) announced a workforce reduction involving approximately 870 employees as part of its previously announced plans to manage operating expenses and realign capital expenditure priorities.
This reduction represents approximately 5% of our global workforce and approximately 10% of our corporate team. At the same time, the Company is making substantial reductions in its third-party labor costs.
Wayfair CEO Niraj Shah said in a letter to employees that the layoffs were a difficult decision brought about by COVID-19. “Our team is too big for the environment we currently find ourselves in, and unfortunately we have to adapt,” he wrote.
According to a CNN report, Wayfair flourished at the start of the pandemic, when demand for high-end furniture and other home decor upgrades was so high it disrupted global supply systems and caused delays. extended shipping. However, two years later, the situation is quite different.
A Reuters report said that when news of the job losses spread, Wayfair’s share price fell. At midday on the New York Stock Exchange on August 19, the stock fell 17%.
In the letter, Shah further wrote that the changes the company was making fell into three categories – “1) thinning out the layers of management to allow team members to focus on execution, 2) better align our work with our strategic priorities, and 3) adjust areas that have simply grown faster than our current revenue trajectory can support.”
The company offers its American employees a severance package of at least 10 weeks. According to the CNN report, the cost of severance and employee benefits will be between $30 million and $40 million.
The CNN report added that Wayfair had also lost 24% of its active customers, an indication that it was struggling to retain the people it attracted at the start of the pandemic.