Wayfair announced on Friday it is cutting 13% of its global workforce, including 19% of its corporate workers, as sales have taken a nosedive following the pandemic. The cuts impact 1,650 employees.
The furniture and home goods retailer said annualized sales doubled from $9 billion to $18 billion during the pandemic. But that surge was temporary, and its stock value plummeted to lows not seen in more than five years.
"By mid-2022, it was clear we were in a bust period. It was also clear that we had gone overboard with corporate hiring during COVID," company CEO Niraj Shah said in a statement.
Wayfair said cutting staff will save about $280 million per year. There will be an initial cost of between $70 million and $80 million to cover employee severance and payout final benefits.
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Unemployment has remained below 4% for 23 months, but more Americans are struggling with credit card debt and needing second jobs.
The cuts are expected to add $150 million to Wayfair's pre-tax earnings if sales remain flat, the company said, bringing its expected earnings for the year to $600 million.
"I think the reality is that we went overboard in hiring during a strong economic period and veered away from our core principles, and while we have come quite far back to them, we are not quite there," Shah said. "The best way to make sure everyone in the company can thrive and that we can do the most for our customers is to make sure that we make the right decision in terms of what our go-forward organization should look like."
