Wayfair Announces Workforce Realignment Plan; Lays Off 1,650 Workers

Wayfair announced details related to right-sizing its cost structure, following the series of actions originally initiated in August 2022. After a comprehensive, organisation-wide analysis of the appropriate team size and structure, the company announced a workforce reduction involving approximately 1,650 employees, representing approximately 13 per cent of its global workforce and approximately 19 per cent of its corporate team, in each case as of 31 December 2023. This action is expected to deliver annualised cost savings of more than $280 million.

"Earlier today I sent a note to all Wayfair employees detailing today's action and the rationale behind it, which is available for everyone to read on our company site. 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. 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," commented Shah, CEO, co-founder, and co-chairman, Wayfair. 

Shah continued, "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."

The following are additional details on the workforce realignment plan announced today:

• Approximately $150 million of annualised cash compensation savings, roughly $125 million of which will be reflected in the company's Selling, Operations, Technology, General & Administrative (SOTG&A) expense line with the remainder from the Customer Service & Merchant Fees expense line. These are net savings figures incorporating the company's plans to rebuild a portion of the headcount over 2024.
• Approximately $80 million of annualised equity-based compensation relief associated with the impacted employees.
• Approximately $50 million of annualised savings related to a reduction in capitalised technology labor, which is accounted for as a component of the company's capital expenditures line item.

As a result of the workforce reduction, Wayfair expects to incur between approximately $70 million and $80 million of costs, consisting primarily of employee severance and benefit costs, most of which are expected to be incurred in the first quarter of 2024. The foregoing estimated amounts do not include any non-cash charges associated with equity-based compensation.