Wayfair plans to reduce headcount by 870, shares plunge 20%

Wayfair Inc (W) said last week that it would cut nearly 870 jobs (5% of its global workforce), as it seeks to reduce operating expenses and to realign investment priorities.

The company said the costs related to the layoffs would be within the range of $30 million to $40 million, mostly due to employee severance and benefit expenses.

Wayfair said it expected to incur the most of those costs in the third quarter.

Earlier in August, the online furniture retailer reported a larger-than-anticipated quarterly loss due to rising supply chain expenses and easing demand for furniture from pandemic highs.

Sales of furniture and other household items rose during pandemic-related lockdowns, as people stayed mostly at home.

“I think the home furnishing markets even compared to pre-pandemic is still good, because we are spending a lot more time at home,” Oliver Wintermantel, an equity analyst at Evercore ISI, was quoted as saying by Reuters.

“We’re continuing to update or upgrade home but it’s certainly down versus where we were in the last two years.”

The shares of Wayfair Inc closed lower for the fifth time in the past ten trading sessions in New York on Friday. It has also been the steepest single-session loss since May 5th. The stock went down 20.09% ($14.33) to $57.01, after touching an intraday low at $56.43. The latter has been a price level not seen since August 2nd ($55.36).