In this article, Wayfair 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 the company’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 the company’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 primarily into core initiatives like physical retail and its remaining international markets. The company’s guidance remains unchanged despite the layoffs, which are more about reallocating resources to profitable initiatives, as explained by Gulliver.
The decision to exit the German market aligns with Wayfair’s strategy to focus on initiatives with higher return on investment, such as expanding into the U.K., Canada, and physical retail. The company aims to open more stores in the U.S. and potentially in international markets like Canada and the U.K.
Although physical retail involves significant capital expenditure, Wayfair is optimistic about its potential. The company’s move comes amidst efforts to drive growth in a slow housing market that has impacted demand for home-related products. Despite the challenges, Wayfair believes that focusing on higher ROI priorities is the right step for the business.
