Online furniture seller Wayfair on Friday announced its decision to lay off 1,650 employees, about 13 per cent of its workforce. The Boston-based company said the job cuts will result in annual cost savings of $280 million.
Wayfair’s Indian-origin CEO Niraj Shah said that the company’s aim is to maximise the free cash flow and reduce its total share count. In a note to his employees, he said that the management went ‘overboard’ in hiring during a strong economic period and ‘veered away’ from the ‘core principles’, Reuters reported.
Last year, Wayfair had cut 1,750 jobs or about 10 per cent of its workforce. At the end of 2022, the company had a global workforce of about 17,505 employees.
According to the report, Wayfair said in a ‘hypothetical flat revenue’ environment, it expects to deliver over $600 million of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024.
“Enhanced profitability in 2024 will be primarily driven by optimized payroll, but we also see management pressured to drive stronger efficiencies in logistics and pursue additional prudence in advertising spend,” Jefferies analyst Jonathan Matuszewski told Reuters.
The company had 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, Wayfair had been hit by 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.
(With Reuters input)
