Budget-furniture seller Wayfair (W-2.67%) is shifting its focus toward physical retail stores and North American markets as it cuts over 700 jobs and exits Germany.
CEO Niraj Shah told employees on Friday that the company will close its German operations, acknowledging that scaling the business there has proven too costly. Despite efforts to grow in Deutschland, weak economic conditions, falling revenues, and rising ad costs have motivated the company to prioritize other regions, including the U.S., Canada, U.K., and Ireland.
“This is not a decision made lightly, and we recognize the profound impact it has on our team members and their families,” Shah said. He credited Germany, where growth has lagged, as having been an important hub for Wayfair’s European expansion over the past 15 years, helping it establish a customer base and supplier partnerships.
The layoffs, affecting roughly 730 employees globally, are part of a broader restructuring expected to cost the company up to $111 million, according to chief finance officer Kate Gulliver. She told CNBC (CMCSA-2.09%) that impacted employees will receive severance packages and support through the company’s job-placement program. Some employees are getting the option to relocate to places such as London and Boston.
This is not the first time Wayfair has slashed a significant portion of its workforce. In January 2024, the online retailer laid off 1,650 employees, or about 13% of its staff. This marks the third consecutive year Wayfair has made large-scale cuts, following a 1,750-person reduction (about 10%) in January 2023.
Wayfair, one of the world’s largest home-goods and furniture sellers, already has a physical presence in Chicago, where it opened its first brick-and-mortar store in May 2024. The company says it has seen a positive response, with online customers in the area increasingly choosing to pick up their orders in-store. It plans to add up to two more locations soon.
Wayfair sales fell 2% to $2.9 billion in the third quarter of 2024, yet the company indicated that it’s optimistic about expanding further, especially as the housing market slows and customers become more discerning with their spending. In August 2024, CEO Shah said, “Customers remain cautious in their spending on home,” adding that credit data shows, “the category correction now mirrors the the peak-to-trough decline seen during the Great Financial Crisis.”
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