Wayfair said on Friday it would lay off 1,650 employees, or about 13 percent of its workforce, sending the company’s shares up as much as 15 percent.
The online furniture retailer said the job cuts, which affect 19 percent of its corporate employees, would lead to annual cost savings of $280 million.
CEO Niraj Shah said Wayfair’s aim is to maximize the company’s free cash flow and potentially reduce its total share count.
“We went overboard in hiring during a strong economic period and veered away from our core principles,” Shah said in a note to employees.
Boston-based Wayfair announced rounds of layoffs in 2022 and 2023. In last year’s cuts, it eliminated 1,750 jobs, or about 10 percent of its workforce.
The company had a global workforce of about 17,505 employees as of the end of 2022, according to a 2023 proxy statement.
“The workforce restructuring is another impressive move in optimizing the business for Wayfair’s current level of demand and positioning the company for sustained profitable growth,” said Raymond James analyst Bobby Griffin.
On Thursday, department store chain Macy’s also said it would cut 2,350 jobs and close five stores.
Wayfair said it expects to deliver over $600 million of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024. Analysts on average expect $479.3 million, according to LSEG data.
It forecast about $70 million–$80 million of costs, consisting primarily of employee severance and benefit costs, most of which would be recorded in the first quarter of 2024.
Since 2021, the company has seen its net revenue drop for nearly two years as after the pandemic customers spent more on travel and entertainment. In November, despite quarterly revenue increasing, Wayfair fell short of beating analyst estimates.
By Granth Vanaik