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Wayfair Shares Jump After 13% Of Its Workforce Is Cut By 1,650 Jobs

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Wayfair Shares Jump After 13% Of Its Workforce Is Cut By 1,650 Jobs

(CTN News) – The digital home goods retailer says it is cutting 13% of its Wayfair global workforce as it cuts layers of management and reduces costs after going overboard with corporate hiring during the Covid pandemic.

Approximately 1,650 employees will be laid off, including 19% of the corporate team, Wayfair said.  It’s the third restructuring Wayfair’s done since summer 2022, and it’s expected to save $280 million.  As soon as Wayfair’s news was announced, its shares spiked 15%.

Niraj Shah, Wayfair’s co-founder and CEO, said the changes represent a return to our core principles. In spite of persistent category weakness, we are encouraged by our share gains.” Hasbro, Etsy, and Macy’s all announced layoffs as retailers struggle with slowing demand and an uncertain economy.

In mid-December, Hasbro and Etsy announced staff reductions of 1,100 and 225 workers, respectively, and Macy’s said it would cut more than 2,300 employees, or 3.5%. Five stores will close as well.  Rather than being a reaction to fourth-quarter performance,

Wayfair said the cuts were a proactive measure.

Consumers stuck at home used stimulus dollars and savings to splurge on furniture and decor during the pandemic. Shah said in a memo to employees Friday that sales went from $9 billion to $18 billion “almost overnight.”

Home goods demand started to drop as the virus’ impact waned. Consequently, Wayfair has had to cut staff to stay in line with its business.

We were in a bust by mid-2022. “We went overboard with corporate hiring during Covid,” Shah said. As everyone here knows, we’ve had two major corporate restructurings since 2022. Every time, we used our best judgment, identified the cost target we needed to hit, and resized accordingly.

With every reduction, we’re getting more done faster. We need to focus as a company on what small teams can accomplish.

There’s no such thing as too many great people,” he said. The problem is that if you have too few, you don’t get everything done. Too many causes inefficiency, coordination costs, and low-return investments. We’ve been experiencing that, and we need to stop.”

It said it wanted to get rid of senior leaders who spent too much time meeting with each other instead of actually doing their jobs. A lot of positions in business, product, design, research, and analytics don’t “create better technology outcomes” and will do the opposite, Shah said.

It’s thanks to everyone’s hard work that we’re moving forward. We’ve reached the end of our toughest stretch. “The year will be great,” Shah predicted. It plans to rebuild some headcount this year, but will focus on lower-ranking jobs and positions that execute on actions, instead of leadership roles that oversee them.

In 2024, Wayfair expects to bring in $600 million in adjusted earnings before interest, taxes, depreciation, and amortization, up from $450 million last year.

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