Digital home goods retailer Wayfair is planning to lay off 13% of its global workforce as a part of its restructuring effort to reduce management layers, cut costs, and streamline its operations after over-hiring during the COVID-19 pandemic. The company announced it will be laying off about 1,650 employees, mainly targeting those in management and leadership roles.
The layoffs, which mark the third round of staff reductions since Summer 2022, are expected to result in savings of around $280 million for the company. The announcement of the job cuts led to a 15% surge in Wayfair’s shares in premarket trading.
Wayfair CEO and cofounder, Niraj Shah, noted that the company continues to see share gains despite challenging conditions. The move follows similar workforce reductions by other retailers such as Hasbro, Etsy, and Macy’s amidst an uncertain economy and slowing demand.
Wayfair also clarified that the layoffs were not in response to its fourth-quarter performance, but a proactive measure to bring the company back to its core structure. The company saw a spike in its operations during the pandemic, causing their sales to double. However, as the pandemic recedes and the home goods sector experiences a slump in demand, Wayfair found necessary to resize its staff structure to coincide with its business levels.
The company intends to refill some of the vacant positions throughout the year, focusing on junior and execution-focused roles rather than leadership positions. If revenue remains steady, Wayfair anticipates a rise in adjusted EBITDA to $600 million in 2024, up from the previous estimate of $450 million.
