Wayfair Lays Off 13% of its Workforce Weeks After Telling Employees to Work Harder
Online home goods retailer Wayfair is set to lay off 1,650 employees, equivalent to 13% of its global workforce, as the company faces challenges in sustaining its earlier success during pandemic lockdowns.
CEO Niraj Shah, who recently gained attention for urging employees to work harder, acknowledged in an open letter posted on Friday that Wayfair had “gone overboard in hiring during a strong economic period,” particularly in 2020 when the surge in online shopping doubled the company’s sales to $18 billion.
However, as mid-2022 arrived, Shah noted, “it was clear we were in a bust period,” prompting Wayfair to implement layoffs in 2022 and 2023. Shah emphasized the need for the company to refocus on what committed small teams can achieve, stating, “In many ways, having too many great people is worse than having too few.”
Approximately 20% of the layoffs will impact the corporate team, with the total job reductions expected to save Wayfair an estimated $280 million annually. All affected workers will receive an email detailing their future with the company, and severance packages will be offered.
Wayfair, based in Boston, had around 14,000 employees as of 2023. In response to the announcement, shares of Wayfair (W) surged nearly 16% in premarket trading.
Wayfair’s fortunes have shifted since the early days of the pandemic when it thrived amid heightened demand for furniture and home decor. However, current challenges include inflation leading to high prices, causing middle-income shoppers to cut back on discretionary purchases. Wealthier customers have redirected spending toward travel and services, while high mortgage rates have dampened demand for new homes.
CEO Niraj Shah had previously emphasized the importance of hard work in a year-end letter to employees, stating, “There is not a lot of history of laziness being rewarded with success.” The recent layoffs follow Shah’s call for increased effort and efficiency within the company.
