Wayfair has announced additional details related to "right-sizing" its cost structure, as well as continued strong business performance since the Cyber Five period.
Totalling more than $1.4b in annualised cost actions, Wayfair's plan – initiated in August 2022 (see related) – is well under way, and is expected to accelerate the company’s timeline for adjusted EBITDA breakeven to earlier in 2023 as the first step towards positive free cash flow.
As a part of this effort, Wayfair has announced a reduction of approximately 1750 employees, representing 10% of its global workforce as of December 31st, 2022. This includes approximately 1200 or 18% of corporate employees.
Wayfair says these changes reflect efforts to "eliminate management layers and reorganise to be more agile". Inclusive of its August 2022 restructuring, the labour portion of the plan represents approximately $750m in annualised cost savings, with the major steps necessary to realise these savings now complete.
“Although difficult, these are important decisions to get back to our 20-year roots as a focused, lean company premised on high ambitions and great execution,” says Niraj Shah, CEO, co-founder, and co-chairman, Wayfair. “The changes announced today strengthen our future without reducing our total addressable market, our strategic objectives, or our ability to deliver them over time. In hindsight, similar to our technology peers, we scaled our spend too quickly over the last few years. The good news for Wayfair is that we have operated in a highly productive and efficient way for the vast majority of our 20-year history, and we are now simply returning to that.
“To our colleagues departing Wayfair, I want to thank you for your contributions to the company and for the impact you’ve had on the business. We’re deeply saddened that these changes will take us in different directions.”
Behind these cuts, business momentum continues to strengthen. In December, YoY gross revenue trends experienced a further improvement compared to the month of November, says Niraj: “We are encouraged by our recent topline performance, and in particular the momentum in orders. Our market share continues to improve as our core offering strengthens across key dimensions such as availability, speed, and price.”