Wayfair CEO cuts another 1,650 jobs
Had cited ‘bloated’ cost structure at online retailer in December
Wayfair is cutting jobs for the third time in the past 18 months as the struggling online retailer strives for profitability.
The Boston company on Friday said it would cut 1,650 jobs, or 13 percent of its workforce. “We’re reducing team sizes across the organization, as well as reducing seniority in certain roles that we plan to rebuild with modified leveling over the course of this year,” chief executive Niraj Shah said in a statement.
The layoff includes about 500 people who live in Massachusetts and more than 400 others who work remotely around the country and report to the Boston office, according to a company spokesperson.
Employees and investors at Wayfair and other tech companies might have hoped 2024 would mark a change from a rough couple of years, but so far that has not been the case. In addition to the Wayfair layoffs, tech giants Google and Amazon have cut jobs, along with local companies such as Definitive Healthcare and Vendr. And on
Tuesday, Uber Technologies said it was shutting down Drizly, the Boston alcohol delivery service it bought in 2021 for $1.1 billion.
The latest Wayfair cuts come after Shah hired massively at the start of the pandemic, amid a boom in orders from consumers stuck at home during lockdowns. But the surge was short-lived and Wayfair’s sales — and its stock price — have been shrinking since the middle of 2021.
Shah has been cutting costs ever since, and he urged workers to work harder in an email last month.
“We had definitely let our cost structure get bloated during kind of even the preCOVID years, but definitely during the COVID years,” the CEO said at an analyst conference in December. “We’ve continued to take a really critical eye at cost and keep ripping it out.”
In an email to employees on Friday, Shah said he would prefer to operate more quickly even if the company was understaffed. “The goal was to err on carrying a risk of too few over the risk of too many,” he wrote in the email, which the company posted on its website. “The reality is that we went overboard in hiring during a strong economic period and veered away from our core principles, and while we have come quite far back to them, we are not quite there.”
Shah already cut 1,750 jobs last January and eliminated 870 positions in August 2022. In the meantime, the company has been quietly cutting jobs weekly in the US while expanding a technological development center in Bengaluru, India.
The latest cuts will cost $70 million to $80 million in severance and benefit costs, Wayfair said. But the smaller workforce will mean savings of close to $300 million per year.
Wayfair’s stock price jumped 10 percent on Friday after the announcement. The stock previously had lost 17 percent in 2024.
Analysts warned that Friday’s stock price jump may not be sustainable. “While we understand the mechanics behind this morning’s positive reaction to the improved profitability outlook, we do not interpret a second reduction in force to be a positive read through for underlying industry trends,” Michael Morton at MoffettNathanson Research noted. “Wayfair remains in the eye of the storm for macro pressures and consumers’ preference to allocate their budgets to experiences.”
Sales at Wayfair totaled just under $12 billion over the past year, 3 percent lower than the same period a year earlier, with a net loss of $915 million. Sales peaked at $14.1 billion in 2020.
Adjusted cash flow excluding costs such as interest, taxes, and stock-based compensation totaled $214 million in the first nine months of 2023 versus a loss of $345 million for the same period in 2022.