Having pursued a 'right-sizing' strategy since August 2022, Wayfair has announced further plans to reduce staffing levels across the business, which will see the dismissal of approximately 1650 more employees – representing around 13% of its global workforce and 19% of its corporate team.
Wayfair says the action follows "a comprehensive, organisation-wide analysis of the appropriate team size and structure", and expects it to deliver annualised cost savings of more than $280m.
CEO, co-founder and co-chairman Niraj Shah today issued a note to all Wayfair employees detailing today's action and the rationale behind it.
"The changes announced today reflect a return to our core principles on resource allocation, such as getting fit on spans and layers as well as focusing on our highest priorities," he says. "As a result, we're reducing team sizes across the organisation, as well as reducing seniority in certain roles that we plan to rebuild with modified leveling over the course of this year.
"While today's actions will bolster our adjusted EBITDA roadmap, I am increasingly focused on generating adjusted EBITDA in excess of equity-based compensation as well as capital expenditures, and intend to drive meaningful improvements here quickly. We believe that what matters is maximising our free cash flow while simultaneously tightly controlling and ultimately reducing total share count, and are treating this as our north star.
"To our colleagues departing Wayfair, I want to thank you for your incredible contributions to Wayfair and to our customers. You have so much to be proud of. I truly regret the impact this will have on you."
He continues: "Although persistent category weakness makes revenue growth challenging, we remain encouraged by the share gains we continue to see. Based on today's announcement, in a hypothetical flat revenue environment - inclusive of the rebuilt roles - we would now expect to deliver over $600m of adjusted EBITDA in 2024."
As a result of the workforce reduction, Wayfair expects to incur between $70m-$80m of costs, consisting primarily of employee severance and benefit costs.
