Wayfair to Cut Jobs and Exit Germany
Online furniture giant, Wayfair, has announced plans to exit the German market and cut up to 730 jobs, around 3% of its global workforce. The move is part of the company’s strategy to focus on new growth drivers, such as physical retail.
Relocation Options for Affected Employees
About half of the affected employees will be given the option to stay with Wayfair if they agree to relocate to London, Boston or other locations where the company operates, according to finance chief Kate Gulliver. The affected positions span corporate roles as well as roles on Wayfair’s customer service and warehouse teams.
Reasons for Leaving Germany
CEO Niraj Shah stated that expanding business in Germany would take too much time and money, and the company’s resources would be better spent on other growth initiatives. Factors such as weak macroeconomic conditions, lower maturity of their offering, and limited brand awareness have made it challenging for Wayfair to scale its market share in the German market.
Financial Impact of the Restructuring
The restructuring is expected to cost between $102 million and $111 million, which includes employee-related costs and non-cash charges related to facility closures and other wind-down activities. These costs are expected to be incurred across the fourth quarter of 2024 and the first quarter of 2025.
Future Plans for Wayfair
Wayfair plans to reinvest any savings from the restructuring into other core initiatives, such as its physical retail plans and remaining international markets. The company’s guidance isn’t changing, according to Gulliver.
Wayfair’s Foray into Physical Retail
Wayfair’s venture into physical retail began in May, when it opened its first namesake store outside Chicago. The company has observed a “halo effect”, with increased online sales from customers living near the store. Wayfair plans to open more stores in the U.S. and expand to international markets such as Canada and the U.K.
Wayfair’s Financial Performance
Wayfair’s decision comes as it seeks to bolster growth in a sluggish housing market that has dampened demand for home items. The company hasn’t turned an annual net profit since 2020, and in the three months ended Sept. 30, sales fell 2% to $2.9 billion.
Final Thoughts from Wayfair
While it is difficult to make decisions that impact people, Gulliver stated that the company believes this is the right next step for the business to focus on higher ROI priorities.