US-based online retailer Wayfair is laying off 870 employees worldwide, which accounts for about 5 percent of its total workforce.
The online furniture retailer claimed, in a regulatory filing with the U.S. Securities and Exchange Commission (SEC), “On August 19, 2022, Wayfair Inc. (“Wayfair”, the “Company”, “we” or “us”) announced a staff reduction involving approximately 870 employees in connection with previously announced plans to control operating costs and realign investment priorities.
This reduction represents approximately 5% of our global workforce and approximately 10% of our corporate team. At the same time, the Company is in the process of implementing substantial reductions in labor costs for third parties.
Wayfair CEO Niraj Shah stated in a letter to employees that the layoffs were a difficult decision due to COVID-19. “Our team is too big for the environment we are in now, and unfortunately we have to adapt,” he wrote.
According to a report in DailyExpertNews, Wayfair prospered during the early stages of the pandemic, when demand for luxury furniture and other interior upgrades was so high that it disrupted global supply systems and resulted in lengthy shipping delays. Two years later, however, the situation is very different.
A report in Reuters stated that as news of the job loss spread, Wayfair’s stock price plummeted. In midday trading on the New York Stock Exchange on Aug. 19, the stock fell 17 percent.
In the letter, Shah went on to say that the changes the company made fell into three categories: “1) thinning out management layers to allow team members to focus on execution, 2) aligning our work more closely with our strategic priorities. , and 3) adapting areas that have simply grown faster than our current revenue trajectory can support.”
The company offers its American employees a minimum severance package of 10 weeks. According to the DailyExpertNews report, the cost of the layoff and employee benefits will be between $30 million and $40 million.
The DailyExpertNews report added that Wayfair also lost 24 percent of its active customers, an indication that it was struggling to retain the people it attracted at the start of the pandemic.