Global online home furnishings retailer Wayfair has announced a reduction of approximately 1,750 employees, representing 10% of its global workforce as of December 31, 2022. This includes approximately 1,200 or 18% of corporate employees.
This move relates to its right-sizing cost structure, totalling more than $1.4bn in annualised cost actions, the plan – initiated in August 2022 – 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.
These changes reflect efforts to eliminate management layers and reorganise to be more agile. Inclusive of the 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,” said 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.”
Additionally, business momentum continues to strengthen. In December, year-over-year gross revenue trends experienced a further improvement compared to the month of November. “We are encouraged by our recent topline performance and in particular the momentum in orders,” commented Niraj Shah. “Our market share continues to improve as our core offering strengthens across key dimensions such as availability, speed, and price.”
The company now expects to reach its adjusted EBITDA breakeven commitment earlier in 2023 as the first step toward its goal of generating sustainable positive free cash flow.
Furthermore, Wayfair has issued a product recall on a reversible corner sofa due to a fire safety risk.
The retailer has recalled the Hashtag Homes Abeer Reversible Corner Sofa, which is manufactured in Poland, after the product presented a risk of fire as it does not meet the flammability requirements set out in the Furniture and Furnishings (Fire) (Safety) Regulations 1988.
A statement from the Office for Product Safety and Standards said: “The product has been identified as presenting a risk of fire.
“The product has been recalled from end users. For more information, access the Wayfair recall page at: https://www.wayfair.com/product_recall/Sectionals/143.”
