Wayfair Lays Off 13% Of Its Workforce Just Weeks After Telling Employees To Work Long Hours

Struggling online home goods retailer Wayfair announced Friday it was laying off approximately 1,650 employees, or about 13% of its global workforce. The move comes as a part of the company’s attempt to manage costs and resources. As per a New York Post report, the layoffs are estimated to save the company over $280 million annually.

The layoffs come after its CEO and co-founder, Niraj Shah, went viral for sending out a year-end note to staffers telling them that “working long hours, being responsive, blending work and life, is not anything to shy away from.” Now, Shah has stated that the “changes” announced reflect the company’s return to core principles on resource allocation. The CEO further added that it reflects the company’s move on “getting fit on spans and layers as well as focusing on our highest priorities," in the company’s news release.

With the latest round of layoffs, Wayfair joins other retailers like Macy’s, Hasbro, and Etsy that also announced massive job cuts as inflation and credit card debt soared in the country.

Who Were Let Go?

As per the Post, about 20% of the layoffs are in the corporate team. On Friday, the employees received an email about their future with the company and severance offered. The Boston-based company had about 14,000 employees as of last year.

Further, the company said it will take a $70 million to $80 million hit from the layoffs, primarily coming from employee severance and benefit costs, most of which would be recorded in the first quarter of 2024. The company also aims to deliver over $600 million of adjusted earnings before interest, taxes, depreciation, and amortization in 2024.

How Did It Go Downhill For Wayfair?

At the beginning of the pandemic when online shopping platforms saw an uptick in demand Wayfair flourished as well. The rising demand for furniture and other home decor upgrades soared so high that it bottlenecked the global supply chains and caused lengthy shipment delays.

In 2020, the company saw a “dramatic surge” in demand that doubled its sales to $18 billion.

However, things soon started to change when the country came out of lockdown and things went back to normal. With the Federal Reserve Bank cranking interest rates, inflation skyrocketed, and the demand dropped.

The middle-income shoppers pulled back their discretionary purchases to focus on paying for necessities like groceries, gas, and rent. Thus, Wayfair also found itself struggling with dropping revenues.

However, as things continually got difficult, wealthier customers also shifted their spending from furniture and other goods to travel and services. Further, high mortgage rates cut into demand for new homes.

Late last year, Shah garnered attention for his viral year-end letter to his employees, in which he stated, “Winning requires hard work. I believe that most of us, being ambitious individuals, find fulfillment in the joy of seeing our efforts materialize into tangible results.”

He further added the comments about working long hours and blending work and life to encourage workers. “There is not a lot of history of laziness being rewarded with success,” he added in the note, as per CNN.

Thus, with the recent announcement of layoffs, the company’s CEO has expressed that the company needs to stay focused and committed to what small teams can accomplish. “In many ways, having too many great people is worse than having too few,” Shah wrote on Friday.