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Wayfair Inc. (NYSE:W) announced a workforce realignment plan on Friday as part of a broad effort to right-sizing its cost structure.
After a comprehensive, organization-wide analysis of the appropriate team size and structure, the Boston-based company announced a workforce reduction involving approximately 1,650 employees, representing approximately 13% of its global workforce and approximately 19% of its corporate team. The action is expected to deliver annualized cost savings of more than $280M to the online retailer.
“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,” stated CEO Nirah Shah.
Wayfair (W) has a goal to maximize free cash flow while simultaneously tightly controlling and ultimately reducing total share count. The incremental cost savings are expected to provide the company further confidence in the path to deliver substantial growth in adjusted EBITDA in 2024 on both a dollars and margin basis.
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. Those estimated amounts do not include any non-cash charges associated with equity-based compensation.
Shares of Wayfair (W) jumped 15.45% in premarket trading on Friday.