Wayfair lays off 1,650 workers, citing pandemic hiring boom
Jan. 19 (UPI) -- Wayfair on Friday announced plans to lay off 1,650 workers, citing over-hiring brought on by a profitability boom during the COVID-19 pandemic.
The online retailer said the layoffs would cut about 13% of its global workforce and 19% of its corporate team, with the move expected to save the company more than $280 million.
"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," Wayfair CEO Niraj Shah said. "As a result, we're reducing team sizes across the organization, as well as reducing seniority in certain roles that we plan to rebuild with modified leveling over the course of this year."
Cutting the workforce will cost the company between $70 million and $80 million in worker severance and benefit payments, incurred in the first quarter of 2024.
"Please know that we are offering severance to those who are impacted, and we will support them throughout this transition," Shah said. "We will also be providing access to employee assistance program resources and Wayfair Alumni networking support, as well as other benefits and resources."
In a letter to employees, Shah said Wayfair is consistently profitable, but told employees he has "made the difficult decision to further reduce our headcount today" in order to better position the company to provide a healthy foundation to grow.
Shah said the COVID-19 pandemic created a dramatic surge in business with annual sales going from $9 billion to $18 billion, prompting a wave of hiring. But by mid-2022, he said, Wayfair was in a bust period.
He said having too many workers "causes inefficiency, coordination costs, and investments in lower return activities" and the company needed to end that with the layoffs.
Wayfair said the layoffs were related to "right-sizing its cost structure" following a series of actions that began in August 2022 when the company laid off 870 employees including 5% of its global workforce and 10% of its corporate team at the time.
