In this article, Wayfair has announced its exit from the German market and its intention to reduce up to 730 jobs, representing about 3% of its global workforce. The company aims to concentrate on new growth drivers like physical retail, as stated on Friday.
Approximately half of the affected employees will have the opportunity to remain with Wayfair if they agree to relocate to London, Boston, or other locations where the company operates, according to Kate Gulliver, the finance chief, in an interview with CNBC. The impacted positions include corporate roles, as well as roles within Wayfair’s customer service and warehouse teams.
Founder and CEO Niraj Shah mentioned in a memo to employees shared with CNBC that expanding the business in Germany would require significant time and resources. He highlighted that Wayfair’s funds would be better utilized for other growth initiatives due to challenges faced in scaling market share and improving unit economics in Germany.
Shares of Wayfair dropped about 3% in early trading on Friday. Germany, where Wayfair has been present for 15 years, contributes a “low single digit percentage” to Wayfair’s revenue, customers, and orders, according to Gulliver. The restructuring is estimated to cost between $102 million and $111 million, covering various expenses such as employee-related costs and non-cash charges related to facility closures.
Wayfair plans to reinvest any savings from the restructuring into core initiatives, including physical retail plans and remaining international markets. Gulliver emphasized that the layoffs are not solely for cost savings but to reallocate resources to initiatives generating revenue for the company.
The company’s focus on physical retail began with the opening of its first store outside Chicago in May, leading to increased online sales in the vicinity. Wayfair intends to open more stores in the U.S. and expand internationally to countries like Canada and the U.K. Despite the potential of physical retail, it involves significant capital expenditure, and Wayfair has not reported an annual net profit since 2020.
Wayfair’s decision aligns with its strategy to drive topline growth in a sluggish housing market that has impacted demand for home-related products. The company aims to prioritize initiatives with higher return on investment, emphasizing the importance of focusing on areas like the U.K. and Canada for future growth opportunities.
