Wayfair Inc. W -5.19% is laying off about 1,750 workers, or 10% of its workforce, as the online furniture seller faces falling sales after a pandemic-driven boom.
Niraj Shah, Wayfair’s co-founder and CEO, said in an email to employees Friday morning that the company had outgrown it.
“Today’s changes are mainly about reducing management levels, right-sizing in certain places and making the organization more efficient,” he said.
The Wall Street Journal previously reported that the company is preparing to lay off more than 1,000 employees.
Wayfair’s restructuring is the second round of layoffs in six months at the Boston-based company. Wayfair announced in August that it was cutting about 870 jobs, or about 5% of its global workforce.
Executives say the two rounds of layoffs will yield annual savings of $750 million as part of a restructuring aimed at reducing annual spending by $1.4 billion.
The company joins Amazon.com Inc., Microsoft Corp. and other tech companies to shed jobs in recent months amid signs of slowing consumer spending, high inflation and rising interest rates. On Friday, Google’s parent company Alphabet Inc. announced it would cut about 12,000 jobs and reduce its workforce by 6%.
Wayfair, like many of these companies, has aggressively increased staff during the pandemic to expand its warehouse operations and customer service teams. The company employed 16,681 full-time employees at the end of 2021, up from 12,100 at the end of 2018. The customer service staff has roughly doubled to about 4,900 employees during this period, according to the company.
Wayfair’s sales skyrocketed, and the company returned to profitability in 2020 for the first time since its IPO in 2014, as the pandemic prompted people to order gadgets and furnishings for working from home. However, sales fell 3% in 2021, and sales fell nearly 13% in the first nine months of 2022. In the first nine months of 2022, the company posted a loss of nearly $1 billion.
Last year, executives discussed plans to trim spending and focus on profitability. They said in November that the company plans to achieve more than $500 million in annual cost savings, including reducing staff costs and third-party labor costs and implementing operational changes.
As with Peloton Interactive Inc. and other pandemic-related companies, investors have rushed Wayfair. The company’s shares plunged 83% in 2022, compared to a 19.4% decline in the S&P 500 index. The company’s market value is currently around $4.1 billion, down from its March 2021 peak of $35.8 billion.
Consumers have cut spending on a variety of goods in recent months amid high inflation and concerns about a slowing economy. US retail spending fell 1.1% in December, marking a bleak end to the holiday shopping season. The sales of the furniture and furnishing stores fell even more sharply, falling by 2.5% over the course of the month.
In November, Wayfair said it had strong sales during Thanksgiving and Black Friday weekend and reported that US sales were up for the five days year-over-year.
Shares of the company are up about 6% in premarket trading on Friday.
Write to Paul Berger at [email protected] and Sarah Nassauer at [email protected]
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Appeared in the print edition on January 20, 2023 as “Wayfair Readys to Cut Its Workforce”.