Wayfair is laying off 1,650 employees, amounting to 13% of its global workforce, as the online home goods retailer struggled to rebound following its success amid pandemic lockdowns.
CEO Niraj Shah, who recently went viral for telling his employees to work harder, said in an open letter posted Friday that Wayfair “went overboard in hiring during a strong economic period,” referencing 2020 when online shopping spiked, sparking a “dramatic surge” in demand that doubled Wayfair’s sales to $18 billion.
A few years later, its fortunes have changed, with Shah writing that mid-2022 “was clear we were in a bust period” and Wayfair implementing rounds of layoffs in 2022 and 2023.
“I believe we need to stay focused as a company on what committed small teams can accomplish,” Shah wrote Friday. “In many ways, having too many great people is worse than having too few.”
Nearly 20% of the layoffs will be on the corporate team, with the total job reductions saving Wayfair an estimated $280 million annually.
All workers will receive an email Friday about their future with the company and severance will be offered to those affected.
The Boston-based company had about 14,000 employees as of 2023. Shares of Wayfair (W) soared nearly 16% in premarket trading.
Wayfair had flourished at the beginning of the pandemic, when demand for swanky furniture and other home decor upgrades was so hot that it helped bottleneck global supply chains and caused lengthy shipment delays.
But fast forward four years and the picture looks a lot different now.
Inflation has left high prices in its wake, and middle-income shoppers have pulled back their discretionary purchases to focus on paying for necessities like groceries, gas and rent.
Wealthier customers have shifted their spending from furniture and other goods to travel and services, and mortgage rates remain high, cutting into demand for new homes.
Late last year, Wayfair’s Shah garnered attention for his blunt year-end letter to his employees telling them to blend work and life together.
“Winning requires hard work. I believe that most of us, being ambitious individuals, find fulfillment in the joy of seeing our efforts materialize into tangible results,” Shah said in a note to employees earlier this month celebrating the company’s recent success.
“Working long hours, being responsive, blending work and life, is not anything to shy away from. There is not a lot of history of laziness being rewarded with success,” he added.
Shah also encouraged Wayfair employees to think of the company money they spend as their own and negotiate prices.
CNN’s Nathaniel Meyersohn contributed to this report.
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