Wayfair, an online furniture retailer has announced to cut 1,750 jobs which is approximately 10% of its total workforce. Moreover, the furniture company’s stocks jumped by more than 20% after the announcement was made.
Second round of job cuts within 6 months
Wayfair has employed a cost saving strategy amid decrease in demand of his products. Significantly, the consumer spending is also affected by persistently high inflation which is impacting the company’s revenues. Moreover, this is the second round of job cuts at Wayfair within a period of last six months. Previously, the online furniture retailer laid of 5% of its workforce during August 2022. According to a company’s press release the two rounds of job cuts will save $750 million a year in terms of costs. Furthermore, the announcement sent its shares as much as 26% higher to an over four-month high of $48.94 amid broader market gains.
Wayfair has already initiated job cuts in Europe. Whereas employees in United States started receiving notices to regarding their employment status from Friday. Niraj Shah, Wayfair’s Chief Executive Officer wrote an official email to the employees confirming the job cuts. “Unfortunately, along the way, we over complicated things, lost sight of some of our fundamentals and simply grew too big. On an operating basis, we can see and feel that we’re not as agile as we used to be or need to be.” Nirraj Shah wrote in his letter.
Severance to outgoing employees
The letter stated that outgoing employees will receive severance packages. However, the severance package will depend on individual’s circumstances such as their country, grade and tenure. Moreover, the company is likely to spend $68 million to $78 million in terms of restructuring costs. Importantly, most of this cost is related to employee severance and benefits. Primarily, the company will incur this job cuts related cost during the first quarter of 2023.
Wayfair had a grand slam run during the pandemic era as consumers spend loads of money on home decoration and office furniture. However, factors like rising inflation has affected consumer demand patterns. Alongside, company’s struggles with supply chain related issues also resulted in delays which caused customer frustrations. Wayfair is now expecting that its cost saving efforts will help in reestablishing its position in the market.
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