(CTN News) – Etsy has announced that it will reduce its workforce by 11% during the holiday season to restructure its business and cut costs.
The company cites a challenging macro and competitive environment as the reason for this decision. Around 225 employees will be affected, bringing the total number of employees in the core Etsy marketplace to approximately 1,770, similar to the headcount in early 2022 and higher than the levels in 2020.
Etsy CEO Josh Silverman acknowledged in a letter to employees that while the marketplace has experienced significant growth since 2019, the current circumstances require significant changes.
The letter states that gross merchandise sales have remained stagnant since 2021, indicating a need for improvement.
Additionally, employee expenses have increased despite cost-cutting measures and adjustments to hiring plans. In order to ensure sustainability, the company recognizes the need for a different approach.
Etsy expects a decline in gross merchandise sales of 1-2% in Q4 compared to last year, but anticipates a 2-3% increase in revenue. The company has raised its adjusted EBITDA margin expectations and shares dropped by 7% in response.
As a result, Etsy will lay off around 225 employees, costing an estimated $25-30 million. The restructuring aims to improve operational efficiencies and cost savings, with completion expected by Q1 2024.
As part of the restructuring, Ryan Scott, Etsy’s chief marketing officer, will be departing from the company. His role will be integrated into the chief operating officer position, currently held by Raina Moskowitz, a former executive at American Express.
Additionally, Kimaria Seymour, Etsy’s chief human resources officer, will also be leaving the company. She will be succeeded by Toni Thompson, who currently serves as the vice president of global people and talent strategy at Etsy.
Despite the timing of these layoffs during the holiday season, when many employees are shopping for gifts, Etsy has assured that affected staff will be paid until at least January 2nd.
However, for most staff members, Wednesday will be their last working day.
Affected employees will receive a severance package consisting of 16 weeks of base pay, as well as an additional week for each full year of service.
They will also be entitled to other benefits, including extended COBRA health insurance coverage and the option to retain their company laptop.